07:13 PM

XM Satellite Radio Lowers Projections Due To Less Demand

But the company says it still expects to post a profit in the fourth quarter of the year and for 2007.

XM Satellite Radio Holdings Inc. on Wednesday lowered its projections for subscriber growth this year, citing an unexpected drop in demand for its services and delays in shipping new products.

The Washington, D.C., radio broadcaster lowered its forecast for the end of this year to 8.5 million subscribers from its initial guidance of 9 million. The company expected to report a net loss for the year of $235 million, based on earnings before interest, taxes, depreciation and amortization.

XM, however, said it still expected to post a profit in the fourth quarter of the year, and for 2007.

"Although XM has regained retail market share since the first of the year, 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," Hugh Panero, president and chief executive of XM, said in a statement.

XM was sued this month by the record industry for providing a service that lets subscribers record their own play lists of digital broadcasts without the permission of copyright holders. XM denies any wrongdoing and says it will fight the lawsuit.

Nevertheless, the company said the current legal challenges could affect future products and operating results.

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