XM, Like Sirius, Says It Has Talked With Apple About iPod Receiver
XM, like Sirius, has had “exploratory” discussions with Apple as it sought to expand its satellite-radio service to a variety of combo devices, CEO Hugh Panero told analysts Thurs. But also like Sirius, XM said Apple had no immediate interest in extending its iPod digital audio players beyond the company’s proprietary iTunes music download service.
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Panero said Apple executives he met with, including CEO Steve Jobs, had “a confident air about them” and “were happy” with the iPod’s position in the market place. Apple is focused on driving down product costs and on emerging competition from other digital audio players, Panero said. Jobs said he was “willing to be proved wrong, and only time will tell,” Panero said.
XM’s talks with Apple represent the most recent thrust in its campaign to bring the satellite-radio service to combo products from cellphones to digital audio players. At CES in Jan., XM introduced its Connect-And- Play platform to integrate the satellite radio tuner with CE products including DVD players, A/V receivers and home- theater-in-a-box. XM has signed agreements with 13 CE companies to deliver product in 2005-2006.
The first of the plug & play products, Eton Corp.’s Porsche-designed tabletop AM/FM/shortwave radio/XM receiver ($300) was scheduled to ship in Jan., but has been postponed until late March, a spokeswoman said: “We just wanted to fine tune it a little bit more.” A portable unit ($150), originally due in April, will now ship mid-2nd quarter, she said. The XM-ready products will control a universal outboard tuner ($49) designed into a home XM antenna. The antenna/tuner plugs into a connector on CE products.
“Clearly we'll look at the space where you'd think there was a convergence issue,” Panero said. “We're looking to proliferate the technology across a lot of platforms.”
Meanwhile, XM said its 4th quarter loss widened to $188.2 million from $162.9 million a year ago, despite strong revenue growth as increased marketing and programming costs offset a surge in new subscribers. Revenue was $83.1 million, up from $33.5 million a year earlier. Subscription revenue per subscriber was flat with a year ago at $8.74. Subscription revenue rose to $72.8 million from $28.9 million a year earlier, while activations and equipment jumped to $1.5 million and $4.1 million, respectively from $659,000 and $1.5 million a year earlier. Net ad sales nearly doubled to $4 million, XM said. The rising revenue was offset by an increase in total marketing costs to $107.8 million from $73.7 million a year ago. Per-subscriber acquisition costs during the 4th quarter decreased to $64, down from $73 a year earlier.
The company added 713,101 net subscribers in the quarter, up from 430,580 a year earlier, to end the year with 3.2 million. The subscribers included 2.8 million from aftermarket, OEM and other; 401,989 in OEM promotional periods; and 26,435 XM-activated vehicles with rental companies including Alamo, Avis and National. In the 4th quarter, XM added 490,941 subscribers through retail; 219,955, OEM; 2,205, rental car.
About 12% of XM subscribers at quarter’s end were “family plan” members who pay $6.99 per month for multiple receiver activations in the household, up from 10% 3rd quarter, CFO Joseph Euteneuer said. Multiyear prepaid subscriptions accounted for about 14% of the total, flat with the 3rd quarter, he said. As of Dec. 31, the average XM subscriber was prepaid for 6.9 months of service, up from 6.8 months in the 3rd quarter, 5.2 months a year earlier, Euteneuer said. XM said it expects to end 2005 with 5.5 million subscribers. Sirius reported 1.24 million subscribers as of Jan. 24.