Ends Q1 with 6.5 million subscribers.

XM president/CEO Hugh Panero didn’t seem fazed by the inquiry letters he received from two federal agencies, the FTC and the FCC, except to lament that the letters came just before his quarterly earnings conference call on Thursday (April 27).

XM shares were down as much as $2.01 in early trading Thursday on the federal inquiry news, to $20.00, but had climbed back to $21.23 by around noon.

The FCC’s inquiry letter came on Tuesday, April 25 and involves questions about the Delphi XM SKYFi2. The FCC’s engineering labs tested the XM unit and determined that it’s out of compliance with the Commission’s emission standards.

Panero described the FCC notice as a “general inquiry” and said that “most companies have been through this [type of] process.”

XM chairman Gary Parsons said that “The same day that we received this [inquiry], we got an FCC clarification on how to measure [the emissions limits]. The only thing we can say is it’s not a safety or health issue.” He added that XM has received “minimal complaints” about the device from subscribers.

The FTC inquiry letter also arrived on April 25 and asks for information about XM’s marketing activities, including its telemarketing, free trial period, rebates and other marketing tactics.

XM’s general counsel, Joe Titlebaum, said “To our knowledge, we comply with all of the laws. We’re just going to have to find out what it is that they’re concerned with and respond to that.”

Financial Results

XM reported Q1 revenue today (April 27) of $208 million, basically a doubling from the first quarter of 2005, when revenue was $103 million.

The satcaster finished Q1 `06 with a total of 6,501,859 subscribers, representing a 72 percent increase over the 3,770,264 subscribers at the end of the first quarter 2005.

XM’s cost to acquire a new subscriber, known by the acronym SAC (subscriber acquisition cost), was $62 in Q1 this year. That’s higher than the $52 it cost during Q1 of 2005, but lower than what XM spent in Q4 of 2005—the time period just before Howard Stern’s much-ballyhooed departure for Sirius. During that quarter, XM spent $89 as its SAC .