XM losses widen

[demonseed]

XM Satellite Radio Holdings Inc. reported a wider net loss for the fourth quarter of 2004 on Thursday as the company bulked up on new subscribers, adding more than 700,000 in the latest quarter to top 3.2 million users.


XM, which is based in Washington, D.C., reported a net loss attributable to common shareholders of $190.4 million for the last three months of 2004, more than the loss of $170.2 million reported in the comparable period a year ago.


The per-share loss calculations, however, fell to 93 cents in the latest period from $1.12 a year ago because of an increase in the number of shares outstanding. The loss was smaller than the $1.02 per share that analysts polled by Thomson First Call had been expecting.


Revenues more than doubled in the latest quarter to $83.1 million from $33.5 million in the year-ago period. The revenues were also above the $80.5 million that analysts had been expecting.


XM has been spending heavily on programming and marketing to build up its service as it competes with rival Sirius Satellite Radio Inc. Both companies have been signing deals with automakers to install their devices in new cars, and both are also signing multimillion dollar deals for programming, including Major League Baseball for XM and Howard Stern for Sirius.


XM said it cost the company a total of $100 to add each new subscriber in 2004, down from $137 in 2003. The company disclosed in a regulatory filing that it expected to break even on a cash flow basis in 2006, and that it expects to have subscription revenues of $480 million in 2005. The company also said it expects to have 5.5 million subscribers at the end of this year.


Last month Sirius reported that it ended 2004 with more than 1.1 million subscribers and expected to finish 2005 with more than 2.5 million. Sirius is being run by Mel Karmazin, a longtime radio executive who departed last year as the president and chief operating officer of media giant Viacom Inc., the owner of CBS and MTV.


XM's stock was up 28 cents at $31.68 in midday trading on the Nasdaq Stock Market, about in the middle of its 52-week range of $20.35 to $40.89.


For the full year, XM reported a net loss attributable to common shareholders of $651 million, or $3.30 a share, versus a loss of $604 million, or $4.83 per share, in 2003. Full-year revenues rose to $244.4 million from $91.8 million in 2003.

[robification]

XM said it cost the company a total of $100 to add each new subscriber in 2004, down from $137 in 2003.

am i reading this wrong? you have to subscribe for a year before they actually make a profit off of you?

[Buster H]

am i reading this wrong? you have to subscribe for a year before they actually make a profit off of you?
I was wondering the same thing. There's got to be something I'm missing here. It would seem that once the satelilites are up and running it shouldn't cost any more to add someone. It's not like each antenna out there is going to draw more off of the satellite or anything.

OR

Is that just poor writing? And that's their loss per subscriber? The math doesn't make sense though.

[Arch Stanton]

I think it has to do with how much money goes out the door in advertising, signing new talent and what not to get new subs.

[robification]

well... there are operating costs...

for example, as a retailer, they give me $25 bucks for every sub i sign up. in that figure, i'm sure they're figuring out the costs for CS reps who actually push the button to activate the unit and such. i'm just suprised that new service costs so much to activate.

that stat may also be misleading. are they figuring in advertising costs and the costs of the satellites and such? need more info

[cableone12]

anthony just had to have his alienware computer......

[Buster H]

I think it has to do with how much money goes out the door in advertising, signing new talent and what not to get new subs.
that makes the most sense. It just seemed wierd that it costs that much to ADD someone.

Rob's right, need more info.

Really doesn't matter as long as they start making money eventually

[Razor Roman]

I am pretty sure they are factoring in a number of things in the "cost per subscriber" figure

1. advertising - figure out how much you spend in a year vs how many people subscribed in that year and you have that number

2. comissions & incentives - paying salesmen, stores, whatever to sell the things - at best buy we don't make comission on an individual basis, but we have goals for "D-Subs" (digital subscriptions)... basically when you sign up for Netflix, etc, or buy a Tivo or XM from best buy, they get a little bit from the company.

3. Discounting the equipment - at Best Buy, all employee purchases are discounted to Cost + 5%. Unless the price to buy it as a regular customer is less than Best Buy's cost (Example, loss leader DVD's on new release day designed to get you into the store to buy other stuff). Ipods are basically sold "at cost". There is also no employee discount on XM receivers (the boom boxes, extra docks, etc. are dicounted quite a bit for employees though)... if you want to buy one cheap you have to do it through XM directly, on the web with a code (like the O&A promotions Foundry has had). I can get a SkyFi2 with Car or Home Kit for $70, versus $170 in a store, a MyFi for $200 vs $350 in the store. That number probably gets averaged in as well...

Also, they may be "subsidising" the cost of equipment, by paying Delphi, etc, to make and develop the product and keep the price below a certain point (cheaper equipment for consumers makes the service more attractive) so you would have to factor that in as well.

[Seth]

Okay, maybe someone who understands this mumbo-jumbo can explain to me why this paragraph
XM, which is based in Washington, D.C., reported a net loss attributable to common shareholders of $190.4 million for the last three months of 2004, more than the loss of $170.2 million reported in the comparable period a year ago.

and the last paragraph

For the full year, XM reported a net loss attributable to common shareholders of $651 million, or $3.30 a share, versus a loss of $604 million, or $4.83 per share, in 2003. Full-year revenues rose to $244.4 million from $91.8 million in 2003.

contradict this:

The per-share loss calculations, however, fell to 93 cents in the latest period from $1.12 a year ago because of an increase in the number of shares outstanding. The loss was smaller than the $1.02 per share that analysts polled by Thomson First Call had been expecting.


Revenues more than doubled in the latest quarter to $83.1 million from $33.5 million in the year-ago period. The revenues were also above the $80.5 million that analysts had been expecting

[Bill]

Okay, maybe someone who understands this mumbo-jumbo can explain to me why this paragraph

Quote:
XM, which is based in Washington, D.C., reported a net loss attributable to common shareholders of $190.4 million for the last three months of 2004, more than the loss of $170.2 million reported in the comparable period a year ago.



and the last paragraph


Quote:
For the full year, XM reported a net loss attributable to common shareholders of $651 million, or $3.30 a share, versus a loss of $604 million, or $4.83 per share, in 2003. Full-year revenues rose to $244.4 million from $91.8 million in 2003.



contradict this:


Quote:
The per-share loss calculations, however, fell to 93 cents in the latest period from $1.12 a year ago because of an increase in the number of shares outstanding. The loss was smaller than the $1.02 per share that analysts polled by Thomson First Call had been expecting.


Revenues more than doubled in the latest quarter to $83.1 million from $33.5 million in the year-ago period. The revenues were also above the $80.5 million that analysts had been expecting



OK. Based on the second paragraph quoted, they have approximately 200 million outstanding now vs approx. 125 million a year ago. That's why, even though they have larger losses, the loss per share is less than it was last year.

The per share losses in the 2nd paragraph quoted are not consistent with the per share losses in the last paragraph quoted because one paragraph is referrig to the entire year, while the other paragraph is referring to the 4th quarter.

Losses increased, even though revenues increased because costs increased by a larger amount than revenues did. Revenue and profit are not the same thing. If something costs a store $2 and they sell it for $5, they have $5 of revenue and $3 of profit, assuming that there are no other costs associated with running the store, such as rent, advertising, etc... (I know that's not realistic. I 'm just trying to keep it simple.)

The only number that doesn't make sense to me is the per-share loss from last year. At approx 125million shares, a loss of $170.2 million should be around $1.35 per share, not $1.12

[Seth]

Wow Bill, thanks. That actually makes sense now. I knew someone would clear it up!

[chopsueychris]

am i reading this wrong? you have to subscribe for a year before they actually make a profit off of you?


Not really what the 137 and now 100 dollars means more to my understanding from other threads over the months is this.

XM WAS spending 137 dollars for each and every person that signed up. So in a nut shell yes a years subscription pays back XM for their losses spent to get you in. With the addition of funds etc, the price to gain new subscribers lessens and closer to green eventually they will be. But you got the right idea of it.

[Tax Kuntz]

I have a headache now.

[MilitantRabbit]

Not really what the 137 and now 100 dollars means more to my understanding from other threads over the months is this.

XM WAS spending 137 dollars for each and every person that signed up. So in a nut shell yes a years subscription pays back XM for their losses spent to get you in. With the addition of funds etc, the price to gain new subscribers lessens and closer to green eventually they will be. But you got the right idea of it.
not green, black. if you're in the black, you're doing good monetarily.

[Bach]

Here's a link to the full press release and earnings spreadsheet. 2004 earnings results just came out yesterday. http://biz.yahoo.com/prnews/050210/nyth066_1.html

[MilitantRabbit]

did i hear that xm is coming to canada?

[generoso]

But the biggest non-suprise is that after this year XM should be breaking even. which means in 2 years they become profitable and pay dividens...The report was good and really nothing new people didn't really know..

[stevethrower]

did i hear that xm is coming to canada?

Ya I think E-Lo mentioned something... but thing is here in Canada eh... a certain percentage of the programming has to be by Canadian artists... so I can just imagine the cluster fuck....

[BigBuffaloFan]

The part I really want to know is that they had 700,000 new sub in the 4th quarter. How many of the are listening to O&A? If O&A brought in most of those subs why are they not being advertised? I could give a fuck less about XM if they didn't have O&A on. If they go off my radio goes on ebay.

[GravyMaster]

The part I really want to know is that they had 700,000 new sub in the 4th quarter. How many of the are listening to O&A? If O&A brought in most of those subs why are they not being advertised? I could give a fuck less about XM if they didn't have O&A on. If they go off my radio goes on ebay.
I bet they had a big part in that 700,000. I'm not saying they brought them all in, but I bet they had a huge hand in that number.

[BigBuffaloFan]

Here's another thought:

Maybe XM should shit can all there high paid lawyers to help them from going into the red. Why are lawyers still controlling some aspects of the show if this is what we are paying for above the regular sub fee, they should shut the fuck up.

[tysonpunchinguterus]

I think that refers to the amount of money spent on advertising, etc. to lure new subscribers compared to the amount of money made from new subscribers during the year. So yeah, it takes about ten months on a new subscription for them to recover the money spent advertising.

am i reading this wrong? you have to subscribe for a year before they actually make a profit off of you?

[BigBuffaloFan]

am i reading this wrong? you have to subscribe for a year before they actually make a profit off of you?

Cell phone companies work the same way. I use to work in sales for Cingular Wireless and it took 13 or 14 months before they start making money on you. For stuff like advertising also the cell phone you get for free or get a discount on they have to pay that. If you buy a cell phone at full cost with out a contract you are only paying about 10% more then the company bought it for. They make very little on the phone it self.

[Skeet Slambone]

Cell phone companies work the same way. I use to work in sales for Cingular Wireless and it took 13 or 14 months before they start making money on you. For stuff like advertising also the cell phone you get for free or get a discount on they have to pay that. If you buy a cell phone at full cost with out a contract you are only paying about 10% more then the company bought it for. They make very little on the phone it self.

And if anyone has ever went to a cell phone store and looked at the full price, they know what you mean. The new camera phones have full purchase prices of $600-$1000.

[DyersEve06]

Here's a link to the full press release and earnings spreadsheet. 2004 earnings results just came out yesterday. http://biz.yahoo.com/prnews/050210/nyth066_1.html



This is the Best Part of their Release

"In January, XM announced new talk programming, including national radio personalities Dr. Laura Schlesinger and G. Gordon Liddy. Both programs are set to debut in mid-February. These talk radio stars join XM's stellar lineup of talk talent that includes Sean Hannity, Al Franken, Michael Reagan, Alan Colmes and Michael Savage"

i guess they really are afraid of telling people the boys are on their service.

[Gonzoid]

Couple of things:

1, It is reported that to actuallys end a satellite into orbit and operation costs in the neighborhood of $200 MM. xm HAS 2 OF THEM, PLUS A HUM

[Gonzoid]

sORRY,

regardless to have that complex in DC plus 2 satellites along with all the staff and expenses is a huge nut to overcome. When they evenually break even, they will be making $$$ hand over fist.

2. This is why i think Sirius will be bought out. When you add those above costs to Stern's ridiculous contract, there is no way they can ever see the light at the end pf the tunnel...Stupid move.

3. Regarding a previous post, OnA give me $0.40 of entertainment today since I nevr would have gotten XM had they not been on it. When they leave, so does my subscription.