XM IV

What a real blitzkrieg looks like.

Only in radioland would it be a good thing to lose $263.1 million in just a single economic quarter. For XM, this number signified its losses in the fourth quarter, and was just released to the public, making it known that the company is slowly pulling itself out of its great loss percentage of each quarter. Sure, a “narrower fourth quarter loss,” as the blitzkrieg of articles has dubbed it, is a sign that things are looking good for the media giant. Their losses in the same quarter last year were $270.4 million. Not bad, right? Well, I suppose it’s bad if you look at how much revenue they received throughout the quarter, which came to a grand total of $257 million. But on the upside, their revenue took a 45% increase from last year’s $177 million, showing that things can potentially get better for the conglomerate. With only $6.1 million dollars lost, they must be ameliorating their economic situation. Yeah!

With the good, of course, comes the bad, and the downsides are in abundance. The company now has to push back the projected time of when they think they will turn a profit to 2008. XM also has to move their guesstimation to the end of the year to hit the 9 million subscriber mark, which was their company’s goal to achieve by the end of 2006. With subscriptions at a consistently decelerating basis (2.7 mil. Subscribers added in 2004, 1.7 mil. in ’05, 1.4-1.6 mil. in ’06), XM may even be too overly optimistic in their projections to reach the 9 million mark this year. Stockholders are probably weary about this foretelling, since they already have been taken for fools, and will most likely pull out their stock like lemmings, causing the company to break apart, piece by piece.

Or maybe I’m being a bit overdramatic (I have a tendency to do that). With last week’s official announcement to merge into a single conglomerate with Sirius, XM can claim that the pairing will only produce revenue for the company, leading stockholders to keep their wallets open. But stockholders don’t want money later; they want it now. Those who have faith that the company will do well may only be supportive at the moment, but unwilling to wait and see if the FCC and ruling boards approve the merger. The stockholders will eventually see that there are many, many obstacles to overcome in addition to the legislative approval, like the problem of cross-pollinating signals and merging all of the little deals that have already been set in stone with other companies. Plus, I’m sure they’re not happy when $50 million of Sirius’ money goes to Howard Stern just as a bonus. Can’t forget about that.

So what’s in the future for this company? If my predictions are correct, the company is only going to make less and less money, and at the same time, hold onto their big dreams. I find it already unbelievable that they are nearing the point of profit with each quarter, since the number of new subscribers keep steadily decreasing (hm, highly suspicious). Stockholders will abandon ship, and the company will inevitably crumble, much like a fallen Rome, except without all the literal death. Just metaphorical. The company has the ability to save itself, though. If they treat their stockholders like kings, then they are bound to stay, but that depends on their willingness to do so. The company can also cut costs; no company is too big to do that, even if all of their reported numbers have six zeros. So in the end, will they succeed? That’s up to you. Do you want to become a subscriber or a stockholder after reading all of this? Be wise, my friend, and do what you think is right.