XM Offers Credit To Consumers Due To Outage

Tyler Savery

It is a move that I was very happy to see. I had had worries that consumers complaining about the outage would be given a free month of service, which had potential to cause havoc on the revenue line for XM in Q2.

The two day credit is very reasonable, and perhaps more importantly represents a minimizing of the impact on the financials. By example, if every subscriber were to seek the credit, the impact would come in at under $6,000,000 using an ARPU of $11 per month. Realistically, less than 30% will actually seek out the credit, thus limiting the financial damage to a bit over $1,000,000. While it would obviously be better to have that money in the company coffers, a happy consumer is more valuable.

"Subscribers who request a credit will receive one" by calling the listener care number at 800-967-2346, said spokesman Nathaniel Brown. For the typical subscription costing about $13 a month, that would come to about 87 cents.

Hopefully, this offering by XM can give closure to the outage issue to consumers.

The question now at hand is whether investors are satisfied with the explanations so far from XM surrounding this issue, and that can be a bit more tricky. Also of concern is what steps XM is taking to avoid such happenings in the future. We will likely see some questions relative to this at the annual meeting.

Position - Long XM