Updated from 8:08 a.m. EST.
NEW YORK ( TheStreet) -- Sirius XM (SIRI - Get Report) shares were dropping more than 6% in midday trading on Tuesday after the satellite radio company reported a loss of $81.4 million during the fourth quarter as operating service expenses rose and it paid off a major portion of its debt.
For the quarter ended Dec. 31, 2010, Sirius posted a loss of 2 cents a share. A year earlier, the company earned $11.8 million, or breakeven on a per-share basis.
Analysts were expecting Sirius to break even in the latest fourth quarter as well. The company improved its adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, by nearly 25% to $144 million from $115 million in the 2009 period, while total operating expenses were up 12.1% to $664.3 million from $592.5 million. Free cash flow in the fourth quarter of 2010 was $167 million, up from $150 million in the fourth quarter of 2009. Excluding debt extinguishment and restructuring charges, net income attributable to Sirius stockholders for the fourth quarter would have been $64 million, up from $18 million for the same period in 2009. Revenue in the quarter grew 8.8% to $735.9 million from $676.2 million as subscriber revenue rose $620.9 million from $588 million. Sirius added 328,789 net subscribers in the fourth quarter, up from net subscriber additions of 257,028 in the fourth quarter of 2009. Average self-pay monthly customer churn was 1.9% in the quarter, compared with 2% in the year prior. The company said its subscriber base climbed to 20.2 million subscribers at the end of 2010, up from 18.8 million at the end of 2009. "Sirius XM's results in 2010 were exceptional, surpassing our guidance and achieving record revenues, adjusted Ebitda and free cash flow. Our unparalleled content and the continuing improvements in the economy helped us attain a record-high subscriber base of 20.2 million," CEO Mel Karmazin said in a statement Tuesday. "Our renewed contracts with Howard Stern and the NFL, as well as investments in exciting new content, ensure that our subscribers will continue to enjoy the unparalleled entertainment that has made Sirius XM the largest subscription radio company in the world," Karmazin added. "With the outlook for improving U.S. auto sales, declining capital expenditures and the expanded functionality coming with the launch of Sirius XM 2.0, we look forward to another year of growth and strong financial performance."