XM Satellite Gains Altitude

Shares soar 17% after a narrower third-quarter loss.
Author:
Publish date:

XM

(XMSR)

shares rose 17% early Monday on solid third-quarter numbers.

The Washington, D.C., satellite radio shop is still mired in red ink, but its adjusted net loss improved.

The company also said it is on track to hit positive cash flow in the current quarter, even as it again lowered its subscriber goal.

While XM makes progress on the costs front, the company continues to see its subscriber growth slow as rival

Sirius

(SIRI) - Get Report

signs up more customers and takes more market share.

For the full year, XM now expects its total user count to be somewhere between 7.7 million and 7.9 million.

The prior target, revised downward in July, was between 7.7 million and 8.2 million.

XM started the year with a goal of hitting the 9 million user mark.

This is the third cut in its 2006 user total prediction. As of Sept. 30, the company had 7,185,873 customers.

Excluding one-time costs and customary charges like interest payments and taxes, XM posted an adjusted loss from operations of $1.6 million.

That compares with an adjusted loss of $69.6 million in the year-ago period.

On a standard reporting basis, XM had a third-quarter net loss of $85.4 million, or 32 cents a share, compared to a loss of $134 million or 60 cents a share, a year ago.

Analysts were looking for a loss of 46 cents, according to a Reuters Research tally.

Sales for the quarter were $240 million, up from $153 million in the same period last year.

That was above the $235 million in revenue analysts were expecting.

XM has managed to lower expenses related to user gains.

For the third quarter, the company says the average costs to acquire a customer -- its subscriber acquisition cost -- was $60, down from $64 in the second quarter.

And the cost per gross add, or CPGA, fell to $93 in the third quarter from $112 in the prior quarter.

XM shares rose $1.87 to $13.26 and Sirius shares were up 12 cents to $3.88 in early trading Monday.