XM Satellite Radio (XMSR) put up solid subscriber growth for the first quarter ended Thursday.

The Washington, D.C., pay radio shop signed up 540,000 new net subscribers, exceeding the 500,000 or so analysts had expected. The strong gains in what is typically a slower quarter suggest that the company is on track to meet its goal of 2.2 million new users this year.

Shares of XM fell 65 cents, or 2%, to 30.98, while rival


(SIRI) - Get Report

fell 5 cents to $5.57 in mid-afternoon trading Friday.

XM chairman Gary Parsons said Wednesday that retail sales driven by the company's new MyFi portable radio helped offset a weak performance on the auto front, where car sales have been sluggish.

The company says it now has 3.77 million subscribers and expects to close the year with 5.5 million users. Sirius had 1.14 million users at the beginning of the year.

As the subscriber rolls at both companies have now reached more than a million, the bitter rivalry has started to

mellow into a bit of a truce. On Wednesday, XM's Parsons said he'd be open to splitting a combined charge with Sirius on proceeds from future radio subscribers who opted for a combination of XM and Sirius radio services.

In February, XM pleased Wall Street by boosting is monthly subscriber price to $13 from $10. The price hike may have helped persuade more users to lock in the $10 rate last quarter ahead of the new price.