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Last week, I wrote about XM’s problems with the RIAA. Now, they are having problems with the FCC and it could mean more harm to the stock price (which dropped 40% on the RIAA lawsuit). The company has stopped shipping the popular SkyFi2 made by Delphi and Xpress manufactured by Audiovox. The FCC is also looking at the Roady line of radios also manufactured by Delphi.

The issue stems from the FM broadcasting feature of the radios. Apparently, the signal is much more powerful than FCC standards. Anyone that’s pulled up to someone that has one of these models probably already knows the signal strength. My wife and I both have SkyFi2s and we can pick each other’s radio up on the highway if we are following the other. The signal also reaches from one corner of ourhouse to the other, which absolutely shocked us when we purchased the units.

So, what does this mean for XM? Besides any settlement with the FCC it could put a damper on XM’s growth, which has already been ratched down by a half million subscribers this year. This won’t stop XM from selling the in-car stereos that are sold with new vehicles, but it will stop their most popular “plug-n-play” stereos that allow consumers to bring their radios from their car to their office or home. The stock is curiously up today on the news, probably more to do with recent analyst upgrades, but I’d imagine that whenever the revised growth numbers are released the stock will take another hit. I’m still keeping it in my “products I love, stocks I hate” category.