Sirius Connected Vehicle Business Failing To Meet Expectations

In August of 2013, Sirius XM Holdings (NASDAQ:SIRI) announced that it would be purchasing the Connected Vehicle Unit of Agero, Inc. The $530 million purchase closed later that year, and in early 2014, Sirius management disclosed its expected contribution from the unit: [Sirius CEO Jim Meyer] We expect connected vehicle services to deliver close to $100 million of revenue this year, and we expect to grow this at strong double-digit rates over the next many years. We are in the process of fully integrating the CV business into Sirius XM, and its financial results are embedded in our guidance today. As an early stage growth business, we expect the connected vehicle services product line to contribute at or near breakeven on an EBITDA basis in 2014, but with high variable margins, a relatively low capex profile, and substantial scaling in the business as penetration expands, we see many similarities in the financial profile of …