SatRadio

XM's Satellite Problems

The Rumors:
Drop by any message board or chat room about satellite radio and you are sure to hear about the imminent demise of XM Satellite Radio thanks to doomed satellites. There is a lot of speculation but not a lot of information about the potential problems with XM's three satellites.

The Problem:
It all began in late August of 2001 when Boeing notifying a number of its customers of a potential problem with solar array output power on six of its BSS 702 model satellites. XM owns two orbiting BSS 702 model satellites, "Rock" and "Roll", and a third sitting in storage in case of an emergency. According to Boeing, the power arrays on a number of BSS 702s in orbit have exhibited a faster than expected performance degradation during early operational life. Boeing isolated the problem to the reflectors attached to the satellites’ solar arrays and is removing those reflectors from all future 702 satellites. The satellites would normally generate about 16.000 kW of power from their solar panels. That amount would decrease over 15 years to about 15.000 kW. The defective 702-series satellites could degrade to about 12.000 kW after 15 years.

The Remedy:
hôtels LilleXM plans to launch its spare satellite, XM-3, in late 2004. XM-3 will occupy one of XM’s orbital slots, while XM-1 and XM-2 will be co-located in the other slot and share broadcasting duties. In September of 2003 the company raised $150+ million from its sale of more than 11 million shares of stock to divisions of Legg Mason Inc. and another unnamed institutional investor. XM will use the proceeds to pay for the $190 million launch costs of XM-3. XM has also ordered a $130 million spare satellite, XM-4, from Boeing. XM-4 is scheduled to be completed by the fourth quarter of 2005. XM has signed a contract with Sea Launch to provide a launch of XM-4 that could take place in 2007.

The Litigation:
ERROR MSGIn August of 2003, XM disclosed that insurers for the potentially defective satellites had rejected its $400 million claim on the two orbiting satellites. XM has said it will pursue the insurance claim in court, if necessary. XM needs at least a partial settlement to help pay for the cost of building and launching XM-4. The unnamed insurance companies claimed the satellites are still performing normally. Insurers have already paid a claim submitted by one BSS 702 owner, Thuraya Satellite Telecommunications Co. If the insurers pay for claims on all six, they will face a potential liability of $1.6 billion. The insurers are also considering taking action against Boeing to recoup their losses.

XM Satellite Radio Info

Company Information:
XM Satellite Radio Inc. (formerly American Mobile Radio) is headquartered in Washington, DC. and is a wholly owned subsidiary of XM Satellite Radio Holdings Inc., which is publicly traded on NASDAQ. XM is one of two FCC licensees to deliver satellite radio programming.

Exchange/Symbol: Nasdaq/XMSR

Date of IPO: October 5, 1999

luxury hotels in ValkenburgDate of Service Launch: November 12, 2001

Service Fee: Monthly subscription fee, approximately $9.99 per month

Broadcast Frequency:Lugano hotels 12.5 MHz of S-Band: 2332.5 to 2345.0 MHz

Satellite Information:
Two Boeing 702 satellites built by Boeing Satellite Systems, with payloads manufactured by Alcatel Space. Both satellites will operate in geostationary orbit, with "XM Rock" at 85° West Longitude and "XM Roll" positioned at 115° West Longitude. The satellites maintain a geostationary orbit at 22,000 miles above the earth. Telesat Canada will monitor and control the satellites for XM. Sea Launch provided launch services. XM Radio has a third back-up satellite on the ground should something go wrong in orbit.

XM Satellite Radio manufacturing partners:
Pioneer, Sony , Delphi Delco, Alpine, Audiovox, Clarion, Mitsubishi, Motorola, Bontec, Blaupunkt, Visteon, Panasonic, Hyundai Autonet, Sharp, Eclipse and Sanyo.

Automotive Partners:
General Motors, Saab, Susuki, Isuzu, Porsche, Freightliner, Peterbuilt

Retail Partners:
Best Buy, Circuit City, sears, Tweeter, Good Guys, Ultimate, Al & Ed's, Car Toys, Crutchfild, Sound Advice, Cowboy Maloney's and Magnolia Hi-Fi. (I also advise people to all their local electronics retailer and check).

Technology Partners:
Boeing, Alcatel, Telesat, IIS Fraunhofer, STMicroeletronics, OnStar, Hughes Network Services, SeaLaunch, Zenit, Terk, Antenna Specialists, Klotz Digital, Dalet Digital Media Systems, IBM, Encoda Systems, Acoustic Systems, Inc., Northeastern Communications Concepts, Studio Technology, Radio Systems Inc., Telos Systems, Harris, Genelec, Sony, Denon, Accenture, Siebel Systems, Vitria, Portal, Veritas, Lawson, Oracle, Object Builders, Cisco Systems, Lucent Technologies and SUN.

Ownership Information:
Heraklion alojamientoApollo Group Holdings 9.1%
Motient Corp. 5.8%
Clear Channel 8.5%
DIRECTV 6.6%
GM 5.6%
Madison Dearborn 5.2%
Columbia Capital 3.8%
Baron Capital 3.8%
AEA Investors 2.8%
Telcom Ventures 2.6%
Honda Motor Corp. 2.3%
Employees and Directors 4.5%
Public Investors 40%

Website: www.xmradio.com