As we learned yesterday, a federal judge has dismissed the class action lawsuit alleging securities fraud against XM Satellite Radio Holdings Inc.
Judge Ellen Segal Huvelle of the U.S. District Court for the District of Columbia said the suit, "failed to identify any materially misleading statements or omissions" by XM Satellite Radio that would support a lawsuit.
A group of XMSR shareholders argued that XM executives predicted in mid-2005 that their marketing costs for subscriber acquisition would decline or stabilize. But early last year it was revealed that XM's marketing expenses had significantly increased - causing shares to drop about 28% - and these investors sought to recover these financial losses they incurred for stock or stock options.
But Huvelle ruled that the company's projections of its marketing costs were "forward-looking statements...accompanied by meaningful cautionary language" and therefore shielded from lawsuits.
The plaintiffs also failed to show that XM's statements "lacked a reasonable basis when made," Huvelle wrote.
[AP]
I don't know if XM made false statements, but ...
Someone posted that XM spent $450 million in 2006 for Marketing. If that's true, they are nuts ! They won't recoup 1/4 that money in subs !
It's far cheaper to design the coolest damn radio in the world (with awesome software - like Apple did with the iPhone) and then get tons of free advertising like Steve Jobs did. (Diggit ranks the iPHONE as one of the hottest releases of the year !)
XM and Sirius do have to cut marketing by 75%. Just let word of mouth, cheap rates, great music drive customers to you ! Once the merger happens, the customer confusion goes away and good things could happen - if they play it up.
Come on XM/Sirius - make some BUZZ - get some traction in the press !!
Mike