XM Satellite Radio saw its stock take a hit yesterday on Wall Street. It wasn't because of any surprise in the company's Q4 numbers, which were pretty much what analysts had expected, but because the company announced the resignation of a member of its board of directors who disagrees with how the company is being run. In his letter of resignation, Pierce J. "Jack" Roberts Jr., a former Bear Stearns official, said he did not believe XM was being run in the best interests of the company's shareholders and that he had decided to resign rather than "just go along" with the current course. "Given current course and speed there is, in my view, a significant chance of a crisis on the horizon," he wrote. As it filed the letter with the SEC, XM said Roberts had pressed for the company to cut spending on marketing, programming and promotion to get XM more quickly to positive cash flow generation. The other directors, it said, believe that it is better to sustain XM's subscriber growth and that the company will still achieve positive cash flow by the end of this year. "Frankly, this is a balancing act for management - - and for the board - - that we take very seriously," XM Chairman Gary Parsons said in the Q&A portion of the company's conference call. "We clearly understand that the company can turn strongly positive on a cash basis as soon as we pull back on the accelerator," he added, saying that the company is adding value for shareholders with each subscriber addition, "as long as we do so on economically rational terms."

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Read the resignation letter.

Pierce J. Roberts, Jr.
[address]

Gary M. Parsons
Chairman of the Board
XM Satellite Radio Holdings Inc.
1500 Eckington Place
Washington, DC 20002

Dear Gary:

It has been my pleasure to serve on the Board of Directors of XM for more than 5 years. The company has achieved many notable successes and overcome numerous seemingly-insurmountable obstacles during this period. It has been great fun to have a minor role in helping you, Hugh and the XM team as the company has grown from its founding concept to become a major firm with rapidly growing numbers of subscribers. There is much in which to be pleased.

That said, I have been troubled about the current direction of the company and do not believe that it is in the best interest of the company's shareholders. For some time I have made my analyses and observations known in an increasingly vociferous manner to the Board and a number of senior managers of the Company. I am not having any useful effect and I care too much and believe in my own views too much to just "go along".

Given current course and speed there is, in my view, a significant chance of a crisis on the horizon. Even absent a crisis, I believe that XM will inevitably serve its shareholders poorly without major changes now. It is clear to me that I cannot be part of the solution and I will not be part of the problem.

Therefore, after a lot of thought and with a great deal of sadness, I tender my resignation to be effective immediately. Thanks and best wishes to the entire XM family.

Sincerely,
Pierce J. Roberts, Jr.