05/06/03 16:02 ET
NEW YORK, May 6 (Reuters)
Shares of XM Satellite Radio Holdings Inc.<XMSR.O> on and Sirius Satellite Radio Inc. <SIRI.O> rose sharply on Tuesday, fueled by XM's pact with Wal-Mart, the world's largest retailer, and optimistic comments from a Wall Street analyst.
Both companies are looking for a catalyst for growth of the satellite radio market, with each struggling to remain viable and losing money as they try to attract subscribers.
XM's stock rose about 20 percent after saying its line of portable satellite receivers will be sold at Wal-Mart Stores Inc.<WMT.N>. Wal-Mart will sell the Delphi XM SKYFi system, made in tandem with automotive-parts maker Delphi Corp.<DPH.N>
The line features a pocket-sized device that allows listeners to tune in to the broadcaster's service using a home stereo or as part of a portable "boombox." Introduced in September, the radio receiver sells for around $130, and a kit that connects it to a home or car stereo goes for about $70.
While they already sell at other major stores, such as Best Buy and Sears, the line could gain momentum at Wal-Mart, which has 2,100 stores, many in rural areas where fewer radio stations are available.
Satellite radio offers scores of diverse music, talk and news channels, some of which are commercial free, for a monthly fee of $10 to $13. The devices typically are installed in autos either at the factory or local dealers.
XM shares on Tuesday climbed to $11.63, its highest level since May 2002. In afternoon dealings, the stock traded at $11.44, up $1.74, on volume of 14.3 million, twice its daily average.
Rival satellite radio provider Sirius Satellite Radio Inc. <SIRI.O> also gained on Nasdaq, with its stock up 33 percent, or 30 cents at $1.20. Its volume topped 117 million, making it the most active issue on Nasdaq.
However, he said that Sirius needs to reflect its operating success in its financial results. In the 2002 fourth quarter posted a loss of $134 million on revenues of only $9 million.
"The auto manufacturer line is weak, and XM is handily beating Sirius at the retail outlets," he wrote in a note to clients. "The potential is there -- execution is key."
In April, XM said it had signed up more than 500,000 subscribers to its satellite radio broadcast system, and has pledged to reach 1 million during 2003.
Sirius, which launched its service a year after XM, ended 2002 with just short of 30,000 users. It hopes to reach 300,000 by the end of 2003.
05/06/03 16:02 ET
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HTH
