Sirius Satellite Radio Inc. (SIRI) nudged up its 2005 revenue forecast on Monday but still fell short of Wall Street expectations, sending its stock down as much as 5 percent.

Sirius, No. 2 in the nascent pay-radio market to XM Satellite Radio Holdings Inc. (XMSR), said it expects revenue of $230 million for the year, below the average estimate of $234.2 million among analysts polled by Reuters Estimates.

The company did not provide a reason for raising its forecast from a previous estimate of $225 million.

As of Sept. 15, Sirius had 2.08 million subscribers, and it still expects to hit 3 million by year-end. XM, which launched its service about a year before Sirius, had 4.4 million subscribers at the end of its second quarter in June.

Sirius said it sees "strong revenue growth" in 2006, the first year that popular "shock jock" Howard Stern (search) will broadcast on the Sirius system.

The company said it expects to generate positive free cash flow for the full year 2007. Its first quarter of positive free cash flow could be reached as early as the 2006 fourth quarter, it said.

Shares of Sirius were down 27 cents at $6.78 in late-morning Nasdaq trade after falling as low as $6.63 earlier in the session. The stock, often volatile and usually busy, was the day's most active issue.