Crisis on XM’s horizon?
Facing widening losses even given the record revenue in the fourth quarter, and the departure of a key director, XM may be facing “crisis” in the near future.
XM Satellite Radio Holdings Inc. posted a much wider loss in the fourth quarter on higher costs for marketing and acquiring subscribers. At the same time, a key director quit over disagreements about the company’s direction, warning of a looming “crisis.”
Its shares sank $2.16, or 8.6 percent, to $23.09 in morning trading on the Nasdaq Stock Market, after briefly trading as low as $22.94. Their previous 52-week low was $23.01.
Pierce Roberts Jr. has also left the company due to a disagreement on where the company was heading:
In a letter to board chairman Gary Parsons, Roberts said he was “troubled” by the company’s current path. “Given current course and speed there is, in my view, a significant chance of a crisis on the horizon,” Roberts wrote. “Even absent a crisis, I believe that XM will inevitably serve its shareholders poorly without major changes now.”
But, according to XM, this year is the year that they will finally become profitable.
XM’s CEO Hugh Panero said in a statement that the company expects to reach profitability from its operations by the end of this year, with subscription revenues reaching $860 million. He also said he expects to have 9 million subscribers by the end of the year.
