XM Radio added 2.7 million subs in 2005, including 898,315 in 4Q05, but the new subs came at a hefty price. The sat radio company’s jacked-up marketing and acquisition costs led it to a wider loss for 4Q05 — $270 million, or $1.22 per share, over $190 million, or 93 cents per share, for the same quarter last year — and the resignation of director Pierce J. “JacK” Roberts. In the process, XM more than doubled its revenues for the quarter to $177 million from $83 million while spending $196.4 million on marketing. Thompson First Call analysts expected a loss of 92 cents per share on revenues of $174.1. million.)
Managing for subscription acquisition rather than cash flow is what cost XM the services of Roberts, who resigned Monday; at least, that’s the way it’s being framed by management. Essentially, it’s the same tension faced by many start-ups reliant on subscribers for success. Is smaller and profitable better than larger and a longer wait for profit?
AP | TheStreet.com
Earnings release | Webcast (archived)
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