Today's NFS (No fecking Sheet) trade: "XM Satellite Radio May Need More Money; Shares Plunge
Aug. 7 (Bloomberg) -- XM Satellite Radio Holdings Inc., the
biggest U.S. satellite-radio service, said it may need to raise money to pay for a fourth satellite. Shares of the company, which has never turned a profit, dropped as much as 24 percent.
XM also said its second-quarter net loss widened to
$161.9 million from $117.2 million. On a per-share basis, the
loss was unchanged at $1.38 after XM increased the number of
shares outstanding.
The Washington-based company wrote down the value of its
satellites in the quarter. XM has two satellites in orbit and has
said it needs a third to deliver service through 2008. A fourth
satellite, which would serve as a spare, might require XM to
raise capital, the company said.
``We think that announcement has put some fear in investors,
considering it creates the possibility of a funding gap,'' said
Steve Mather, an analyst at Sanders Morris Harris, who rates the
shares ``hold'' and doesn't own them.
XM's shares, which had risen more than fourfold since
January, fell $3.12 to $10.15 at 2:51 p.m. on the Nasdaq Stock
Market. XM's biggest competitor, Sirius Satellite Radio Inc.,
fell 10 percent. Sirius, based in New York, reported subscriber
gains yesterday that were less than some analysts expected.
Insurance Losses
XM is trying to get insurance reimbursements on its two
functioning satellites because of problems that have developed
with their solar power systems. If it fails to get those
reimbursements, XM said it won't be able to pay for the
construction of a fourth satellite without raising new capital.
Spokesman Chance Patterson said the company is confident it will
recover its insurance losses.
XM's satellites are capable of delivering 101 channels of
talk and music as part of a nationwide service.
XM's second-quarter loss was wider than the average $1.25-a-
share loss that was forecast by six analysts polled by Thomson
Financial. The per-share loss figures reflect the payment of
preferred dividends.
About 209,000 subscribers signed up for XM's $9.99-a-month
service in the quarter, bringing the total to 692,253. Sales more
than quadrupled to $18.3 million.
The company's long-term debt increased to $731.5 million,
from $412.7 million a year earlier. XM sold both stock and bonds
in the quarter and had $345.9 million in cash at the end of June.
Bloomberg News provides programming to both XM and Sirius.
--Michael White in Los Angeles (1)(323) 782-4237, or
mwhite8@bloomberg.net, and Chitra Somayaji in Princeton (1)(609)
750-4668, or csomayaji@bloomberg.net, through the New York
newsroom, (1) (212) 318-2300. Editors: West, Hertzberg
Story illustration: For a summary of XM Satellite Radio's balance
sheet, see {XMSR US <Equity> CH3 Q <GO>}. For a series of
Bloomberg functions related to XM Satellite Radio, see
{CNP01717730202 <GO>}. |
