Sirius XM Radio Inc on Thursday posted a second-quarter loss on debt-related charges and the auto industry slowdown, but the pay-radio operator said it sees signs of a recovery and raised its 2009 outlook for operating earnings.

Shares of Sirius, which have traded for less than $1 since last September, slipped about 4 percent after the company reported a net loss attributable to common shareholders of $157.3 million, or 4 cents a share.

Excluding $108 million of debt-related charges and other special items, the company lost 1 cent a share, matching analysts estimates, according to Reuters Estimates.

The company, which earlier this year secured financing from John Malone's Liberty Media Corp to stave off looming debt problems, said subscribers to the pay-radio service declined by 186,000 from the first quarter, better than many analyst expectations.

Cost-cutting -- reflected in a drop in the cost of acquiring a new subscriber to $57 from $71 a year ago -- was a primary driver of the company's improved financial results.

On the revenue side, Sirius XM Chief Executive Mel Karmazin said he sees positive potential for subscription sales as the beleaguered auto industry inches toward a revival.

Declines (in car sales) appear to have bottomed out, he said on a conference call with analysts. Production schedules are resuming, 'cash for clunker' programs are working and we are cautiously optimistic that the second half of 2009 will show improvement.

Sirius XM, home to programs by Howard Stern and Oprah Winfrey as well as Major League Baseball, ended the period with 18.4 million subscribers. It marked an increase in original equipment manufacturer (OEM) customers from a year ago -- those gains from radios built into new cars -- but its sales to customers who buy radios in stores fell sharply.

While (the decline) improved sequentially on signs of auto stabilization, the impact seems muted by retail channel decay, said Standard & Poor's analyst Tuna Amobi.

Pro forma revenue rose 1 percent to $607.8 million, on par with analysts' views. The pro forma figures reflect the fact that Sirius completed its purchase of rival XM Satellite Radio last July and compare the latest results as if they were a single company a year ago, also making some accounting adjustments for the transaction.

It raised its 2009 outlook for adjusted income from operations to more than $400 million, fueled by accelerated cost-cutting. It was the second time it lifted the forecast, after raising it in May to $350 million from $300 million.

We think the stronger subs performance, as well as better-than-expected profitability, in the quarter, suggests this number should be attainable, J.P. Morgan analyst Lev Polinsky said in a note to clients.

The outlook improvement comes as more subscribers to Sirius signed up for premium programing packages and on higher prices for users with multiple subscriptions.

In addition, churn, a measure of the number of customers who quit the service, increased from one year ago, but, at 2.0 percent was smaller than in the first quarter, and better than some analysts expectations.

Shares traded at about 52 cents each on Nasdaq, down from 54 cents on Wednesday.

The stock has climbed from a 52-week low of 5 cents a share in February, after Malone's cash infusion allayed fears the company could become insolvent. In August the stock rallied further, fueled by optimism about new revenue streams, the launch of its iPhone software and the cash for clunkers car-buying program.

(Reporting by Franklin Paul, editing by Gerald E. McCormick and Maureen Bavdek)