Sirius XM Radio posted its second consecutive quarterly profit as it increased subscribers to its pay radio service and said its full-year results would be bolstered by improving car sales.

Its shares fell nearly 10% in early trading after rallying 30% over the last three weeks.

Sirius XM Chief Executive Mel Karmazin, said the company has topped 19 million subscribers and expects "to deliver strong operating and financial results in the quarter ahead."

Karmazin's upbeat forecast marks a stark contrast to last year, when Sirius XM, radio home to Oprah Winfrey, Howard Stern and Major League Baseball, flirted with bankruptcy due to its mountainous debt.

Sirius, which signs up most of its customers from new car buyers, comes a day after the auto industry said sales rose 20% in April, reflecting a slow gain from recession-hit levels one year ago.

"The continuing recovery of the automotive sector and expanding signs of increased consumer spending are encouraging signs for the company's growth prospects," Karmazin said.

First-quarter net income was $41.6 million, or 1 cent a share, compared with a year-earlier loss of $238.8 million, or 7 cents. Sirius's outstanding shares in the 2010 quarter were 6.3 billion, up from 3.5 billion a year earlier.

Analysts had expected the company to break even, according to Thomson Reuters I/B/E/S.

First quarter sales rose 11% to $670.6 million, but were just shy of analysts' view of $671.3 million.

Sirius added 171,441 net subscribers, and reiterated its view that it expects to add more than 500,000 subscribers this year.

The company's monthly customer churn rate -- a measure of how many customers quit the service -- fell to 2 percent in the first quarter 2010, from 2.2% in the first quarter 2009. The rate of customers who convert from free trial period to paying customers rose to 45.2% from 44.6%.

On a conference call, some analysts -- citing the solid first quarter -- questioned Sirius's decision to stand by its pro forma revenue forecasts of $2.7 billion this year.

"We have not yet made any changes in guidance for 2010," Karmazin said. "We are being cautious about modifying it this early in the year, but we are very, very encouraged by our current performance, and what auto makers are telling us about auto sales for the rest of 2010."

Its shares were down 12 cents, or 10%, at $1.11 in Nasdaq trading.