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XM Slips Despite Solid Numbers

The stock drops 6% in early trading as losses pile up.

XM Satellite Radio


hit its quarterly targets Thursday, but its shares slipped 6% as growth-hungry investors weren't satisfied.

The Washington, D.C., pay-radio shop added 321,675 net new subscribers in the first-quarter ended in March. That figure is in line with the

upward revisions XM made to its guidance last month.

Shares of the radio broadcaster fell $1.68 to $24.12 in early trading Thursday. Satellite rival


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was down a nickel to $3.37 in early action.

XM's latest-quarter loss ballooned to $170 million, due in part to a $25 million tax deferral adjustment. On an adjusted per-share basis, XM had a net loss of 82 cents on sales of $43 million. That compares to an 89-cent loss on $80 million in sales for the December quarter, and a $1.36-a-share loss on $13 million in sales during the year-ago period. The results were in line with Wall Street expectations, according to a Reuters Research tally.

Subscriber growth was fueled by the addition of "new content and services, including XM Instant Traffic & Weather, expanded availability of XM across a number of new GM and Honda vehicle models and continued strong performance in the retail distribution channel," CEO Hugh Panero said in an earnings release.

XM trimmed its costs per new user to $106, well below the $156 per user level in the previous quarter and under the $122 that some analysts had expected. The improvement stems from the effects of spreading the costs over a larger number of subscribers. Any cost reductions will help ease investor anxieties about the company's rapid cash burn.


disappointed investors last month with its own report of big costs and heavy loses.

At the end of March, XM had $435 million in cash and available credit. Its long-term debt obligation is $693 million.

The company is expected to give an update on its radio installation agreements with Toyota, as well as new subscriber projections, during a conference call starting at 10 a.m. EDT Thursday.