Was I wrong in recommending shares of XM Satellite Radio (NASDAQ:XMSR) to Motley Fool Rule Breakers newsletter subscribers last year? The stock has been slammed over the past year despite a healthy bounce off its springtime lows. The sector has been slammed, too. Rival Sirius (NASDAQ:SIRI) has also seen its shares plummet despite having beaten XM in landing new net subscribers in each of the past four quarters.

We're now ankle-deep into the quarter in which both XM and Sirius expect to achieve positive cash flow before capital expenditures. This should be a glorious moment for the satellite radio revolution. Unfortunately, the market doesn't seem to care, even as XM and Sirius have grown to combine for 12.3 million subscribers.

Strumming chords and cutting cords
Over on the lively discussion boards for Rule Breakers subscribers, someone asked whether XM wasn't setting itself up for another fall. The company is sticking to its year-end guidance of closing out the year with 7.7 million to 8.2 million subscribers. It's a figure that has already been hosed down twice this year. After landing 285,000 net new subscribers in the September quarter, the company would need to land 500,000 more listeners to hit the low end of its range.

It seems like an easy target at first glance. The holiday quarter is always the industry's strongest. XM now has a top-shelf draw in Oprah Winfrey. Sirius is looking to go from 441,101 net new subscribers this past quarter to nearly 1.2 million, so why shouldn't XM be able to land half as many new ears as its competitor? Didn't XM add 898,315 listeners in the fourth quarter of 2005?

It did, it's true. The problem is that it had also landed 617,152 net new subscribers -- a far cry from 285,000 -- in the third quarter of 2005. XM also lost a board member yesterday. This is the second time the company has had an independent board member resign this year. XM now needs to rustle up an independent board member or risk being delisted. Mel Karmazin? Pick up your phone, please. This time, the departing member isn't warning of a "significant chance of crisis on the horizon," at least, but can a company that can't hold on to its board members actually hold on to its subscriber-base lead?

Breaking up is hard to do
The reason I'm even discussing unloading XM is that it's part of a contest we're currently running for Rule Breakers growth stock subscribers. We're asking members to submit their bearish takes on the active recommendations that they'd like to see wiped off the perpetually updated scorecard. The top five entries will get a pretty nifty reward, but the best reward may be that the top dog stands a fair chance of being gutted as a sell recommendation in next month's newsletter.

I have no idea whether XM will make the cut to enter the final five. I do know that it has been the subject of bearish chatter on the discussion board over the past few days.

It stings, of course. I don't like to lose. The only two newsletter picks that I have made this year, CNET Networks (NASDAQ:CNET) and The Knot (NASDAQ:KNOT), are both currently beating the market. Wedding-planning site The Knot has actually soared nearly 80% higher since I singled it out in January, as the company keeps making the most of trouncing expectations and landing the perfect online audience at its most vulnerable moment.

XM, on the other hand, has been a disappointment. Even though you'll find few subscriber-based businesses that can claim 7.2 million subscribers in its first five years, it's been a sloppy seller since the company jacked up its monthly subscription price last spring by 30% to match Sirius and let Howard Stern breathe new life into its rival's lungs.

XM has also been unlucky with its partners. Its early investment in WorldSpace (NASDAQ:WRSP) hasn't panned out. Its online alliance with Time Warner's (NYSE:TWX) AOL and digital downloading pact with Napster (NASDAQ:NAPS) were nice deals, but the company settled for second-tier players.

If XM fails to impress during this pivotal holiday quarter, the days of CEO Hugh Panero at the helm will surely be numbered. If the pessimism runs deep, it may also mean a similar fate for XM on the Rule Breakers scorecard.

XM, CNET, and The Knot are active Rule Breakers newsletter recommendations. Take the newsletter for a 30-day free trial.

Time Warner is a Motley Fool Stock Advisor pick.

Longtime Fool contributor Rick Munarriz is a Sirius and XM subscriber. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.