Sub Gains Power Sirius

The pay-radio giant grabs its 4 millionth user.
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Sirius (SIRI) - Get Report surged 6% early Monday after saying it has more than 4 million subscribers.

The New York pay-radio shop started the year with 3.3 million users. That suggests Sirius has added 700,000 users or so in the nearly completed first quarter. The company didn't change its forecast for 6 million subscribers by year-end.

Sirius' comments will focus Wall Street on the rate of progress at rival

XM

(XMSR)

. The Washington, D.C., satellite radio giant is larger than Sirius, reporting 5.9 million subscribers as of Dec. 31. But XM gained fewer users than Sirius for the first time ever in the fourth quarter of 2005, as shock jock Howard Stern's debut drew users to Sirius in record numbers.

XM expects to have 9 million users by year-end. Its user numbers and Sirius' subscriber figures aren't strictly comparable, as

TheStreet.com

has

reported: Sirius' figures include unsold cars in dealers' lots.

On Friday, though, Sirius said

Volkswagen

and Audi agreed to offer its radios on an exclusive basis starting with the 2007 models. Prior to this arrangement, VW and Audi offered both Sirius and XM's services.

After riding a strong upswing in investor interest last year, the satellite radio sector has been on a slide as concerns grow over spending and red ink. The spending alarms sounded last month when XM director Jack Roberts

resigned in protest over what he called the company's reckless growth strategy. As of Friday, shares in both XM and Sirius were off 26% this year.

Early Monday, Sirius shares rose 31 cents to $5.20 and XM was up 17 cents to $20.91.