XM shares tumble as satellite radios fail more tests

XM Radio continues to see technical issues with some of its most popular satellite radios, which has helped propagate a share tumble to near XMSR's 52-week low. The Roady XT and MyFi products have failed to pass tests from the FCC regarding the amount of noise these units pass out into the air when the FM transmitter feature is used. There are millions of these units in use today, and they are among XM's best-selling units because they can be used with any car radio or stereo system that has just an FM radio built-in. There is no need to hard wire them to any car stereo system at all, although the fidelity is lowered quite a bit.

The problem lies in the potential interference other FM users may experience when an XM customer with an XM radio using the FM transmitter feature gets close by. While this may seem like a low-end problem (it is in my view), there are no bones about it -- XM must correct this "defect" in these XM models before they can be sold again. With the holiday shopping season getting closer, this is a serious deal for XM, which needs to continue bolstering its subscriber numbers so that the company can become profitable sometime this decade (at the earliest).

An added issue is that XM may start taking existing XM radios with built-in FM transmitters off store shelves, denting sales even now. The speed at which XM responds to this crisis -- which it is for sales alone -- will be a good indication of the strength of its management team.

Brian White has worked in various executive positions in technology and telecommunications and now focuses on editing and writing.