XMSR

The stock of XM Satellite Radio Holdings Inc. took a small stumble after the company posted a wider first quarter loss and reveled that the U.S. government is investigating XM’s billing and marketing practices.

XM added 569,000 net new subscribers in the first quarter of 2006, bringing the company’s total subscriber base to 6.5 million as of March 31. The satellite radio provider reported revenue of $208 million, an increase of more than 100 percent from the $103 million reported in first quarter 2005, but the net loss grew from $119.9 million in the first three months of 2005 to $149.2 million in the first quarter of 2006.

Revenue growth was driven by significant subscriber growth and increases in average revenue per subscriber in connection with a price increase implemented in the second quarter of 2005.

For the first quarter of 2006, XM’s subscriber acquisition cost was $62 compared to $89 in the fourth quarter of 2005 and $52 in the first quarter of 2005. Cost per gross addition was $94 compared to $141 in the fourth quarter of 2005 and $90 in the first quarter of 2005.

“XM delivered solid results on key financial metrics during the first quarter,” XM President and CEO Hugh Panero said in a statement. “XM added more than 568,000 new subscribers at efficient subscriber acquisition cost levels. XM is positioned for continued strong growth in 2006 with our outstanding content and the introduction of five new radio models, including our revolutionary XM/MP3 players. With our first quarter subscriber growth, we remain on track to reach 9 million subscribers and positive cash flow from operations by year end.”

XM’s results were in line with estimates, Robert Peck, a satellite analyst with Bear Sterns, told investors in an April 27 note, but he said the U.S. government actions were likely to overshadow any performance gains.

XM revealed that it received a letter from the U.S. Federal Trade Commission (FTC) April 25 stating that regulartors were looking into whether XM’s activities comply with various rules, including the FTC Act, the Telemarketing Sales Rule, the Truth in Lending Act and the CAN-SPAM Act. The letter requests information about a variety of our marketing activities, including free trial periods, rebates, telemarketing activities, billing and customer complaints, XM said in a filing with the U.S. Securities and Exchange Commission.

XM also said the U.S. Federal Communications Commission has said that a transmitter on its Skyfi2 radio is not in compliance with emission limits. XM said it is conducting an internal review of these matters.

XM said it “is too early in the process to determine the significance, if any, of these matters to our business, consolidated results of operations or financial position.”

The company’s shares fell as much as 9 percent after the announcements. The stock also took a hit shortly after releasing its 2005 numbers in January, when a director quit the company citing disagreements about heavy spending.

ANDW

Andrew Corp. profit slipped on the 2006 second quarter as revenues remained flat, the company announced April 27. Second quarter income was $3.6 million in the 2006 second quarter, down from $15.2 million in the same period a year ago. Sales in the most recent three months were $482 million about the same as the 2005 second quarter.

“This was a challenging quarter operationally and we are clearly disappointed that we did not report continued margin improvement,” Ralph Faison, Andrew’s president and CEO, said in a statement. “Weaker volumes in January and February, a less favorable product mix within Antenna and Cable Products towards emerging markets, unfavorable foreign currency exchange rates in [the Europe, Middle East and Africa region] and incremental costs associated with our legacy Earth station antenna business drove operating results below our previous expectations.”

Satellite Communications sales decreased 9 percent versus the prior year quarter due to an anticipated decline for certain consumer broadband satellite programs.

Total orders increased 8 percent to a record $549 million due mainly to global wireless network upgrades and expansion, new product introductions and international geolocation equipment orders.

“Our geolocation product line and Satellite Communications product group are now positioned to deliver sequential sales growth and we anticipate improved financial performance towards our margin goals over the next several quarters,” Faison said.