XM Lowers Forecast of Subscriber Growth

XM Satellite Radio Holdings Inc. lowered its forecast for full-year subscriber growth and revenue Wednesday, citing “overall softness” of retail sales for satellite radios in the second quarter and product availability problems. The company’s shares tumbled more than 11%.

XM, which competes with Sirius Satellite Radio Inc. in the emerging business of selling nationwide radio service delivered by satellite, said it now expected to have 8.5 million subscribers by the end of the year, down from its previous estimate of 9 million.

The Washington-based company also revised its anticipated subscriber revenue for the full year, saying it would be about $835 million, down from its previous estimate of $860 million. The company had told investors on April 27, when it reported first-quarter results, that it expected to reach those full-year goals.

XM’s shares, which were already down about 50 cents before the announcement, declined even further after the news came out, closing down $1.76, or 11.4%, at $13.75, after dipping as low as $13.43 earlier in the day.

That marked a new 52-week low for the stock, which previously had traded in a range of $15.49 to $37.31.

XM Chief Executive Hugh Panero said in a statement that “the satellite radio category has seen an overall softness at retail during the second quarter to date, and we have been later than anticipated with broad availability of our new products.”

Satellite radio shares have lost their status in recent months as investors worry about continuing losses and high expenses for signing up subscribers as well as top-tier talent such as shock jock Howard Stern, whose contract with Sirius is worth $500 million.