XM Satellite ( XMSR) sank 2% early Friday after the satellite radio broadcaster missed its twice-lowered year-end subscriber growth target.

But in a bid to keep pace with rival Sirius ( SIRI), XM also noted Friday that it achieved positive cash flow from operations during the fourth quarter of 2006. Sirius made a similar comment earlier this week, sending its shares higher.

Washington, D.C.-based XM said it added more than 1.695 million new subscribers in 2006, ending the year with more than 7.625 million subscribers. That's shy of the 7.7 million to 7.9 million target the company set in July, when it slashed its user-growth target for the second time in 2006. XM had earlier targeted a 2006-end subscriber total of 9 million.

XM said it added more than 442,000 new net subscribers during the fourth quarter of 2006.

"XM completed another year of significant subscriber growth, despite retail softness, and did so with continued cost controls, achieving positive cash flow from operations during the fourth quarter," said CEO Hugh Panero.

XM and Sirius each saw their once-scorching stocks drop 47% in 2006 as the companies' growth slowed. Investors began to flee amid questions about when the cash-burning broadcasters will start reporting actual bottom-line profits after years of staggering losses.

XM shares dropped 24 cents Friday to $14.74.

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