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

The Washington, D.C.-based company also said it now expects to have full-year subscriber revenue of $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 prior to the announcement, fell even further after the news came out, closing down $1.76, or 11.4 percent, at $13.75, after dipping as low as $13.43 earlier in the day on heavy trading on the Nasdaq Stock Market.

The dip marked a new 52-week low for the stock, which had previously traded in a range of $15.49 to $37.31. Year-to-date, the shares are down nearly 50 percent.

Hugh Panero, XM's chief executive, said in a statement that while first-quarter sales were consistent with its previous guidance of 9 million subscribers by year-end, "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."

However, Panero also noted that despite the trimming of XM's full-year subscriber estimates, the new guidance still represents growth of more than 40 percent over the course of the year. The company said it still expects to have positive cash flow from operations for the fourth quarter and on an annual basis for 2007.

Satellite radio shares have lost their status as stock market darlings in recent months as investors worry about their 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.

Sirius' shares have also suffered in recent months and are down 45.1 percent in the year to date. Those shares fell 22 cents, or 5.6 percent, to close at $3.68, after dropping as low as $3.60 Wednesday on the Nasdaq, a 52-week low.

XM has delivered other bad surprises to investors recently, including news last month that federal regulators were probing its marketing practices. The company also disclosed earlier this year that one of its directors quit over disagreements about the company's direction and warned of a looming "crisis." The director, Pierce J. Roberts Jr., had pressed for tighter cost controls.

In its statement, XM also noted that it was "currently working through regulatory and legal challenges" which could require the company to further revise its guidance.

Earlier this month XM was sued by major record companies over a new iPod-like device that can store up to 50 hours of music. The suit claims that XM's handheld "Inno" infringes on music copyrights by recording music and automatically parsing the files by song and artist.

The company issued the lower guidance about 30 minutes before its chairman, Gary Parsons, was set to deliver a presentation to investors at a conference. There, he opened his remarks by saying he was "not as happy to be here today" because of the announcement that preceded his appearance.

Parsons said the company has heard consistently from large investors that it would not be rewarded for "growth at any cost" and was focusing on generating cash and growing in a cost-effective manner.

"We know that throwing money at it to increase growth beyond what its natural pace is is probably not a good thing," Parsons said. Later, in a question-and-answer session, he said: "We can't get too macho about fighting for market share."

Late Wednesday Sirius reaffirmed its previously issued guidance of getting to more than 6.2 million subscribers by the end of 2006. Sirius expects to add more than 2.8 million subscribers during the year.

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On the Net:

http://www.xmradio.com

http://www.sirius.com

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