XM Satellite's Orbit Decaying Fast

The company thanked Roberts for his contribution, but didn't agree with his view that XM had faced a spending crisis. The company reiterated last week that it is on track to be free cash-flow positive in the fourth quarter.

In the latest round of earnings, Sirius claimed it was getting higher retail market share and higher advertising revenue than XM. Meanwhile, XM revealed that the Federal Trade Commission had opened an inquiry into the company's sales practices, though neither the agency nor XM has identified the nature of the probe.

The prospects for XM will be more encouraging once the dark clouds have lifted a bit, says Merrill Lynch analyst Laraine Mancini in a research note Thursday. Mancini has a neutral rating on XM.

"Although we believe XMSR shares are undervalued based on fundamentals at current levels," Mancini writes, "we remain cautious as it may take several positive news events to regain investors' confidence and move the shares higher."

XM shares rose 55 cents to $18.06 and Sirius was up 3 cents to $4.75 in midday trading Wednesday.

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