The largest satellite radio company in the U.S. – SIRIUS XM Holdings Inc. (SIRI) – has reached an agreement with Ford Motor Co. (F) to provide Ford customers a five-year subscription to SiriusXM Traffic and SiriusXM Travel Link. These services will be available on all Ford vehicles, starting with 2015 models that are equipped with navigation facility.
Once implemented, Ford customers will be able to receive vital information like traffic conditions, fuel price, movie listings, sports scores and weather information through satellite from SiriusXM. SiriusXM Traffic and SiriusXM Travel Link were first promoted by Ford in 2009.
This Zacks Ranked #3 (Hold) stock will also offer buyers of new Ford vehicles a six-month subscription to SiriusXM's All Access Package. Additionally, they will also gain right of use for SiriusXM's premium programs, SiriusXM Internet Radio on smartphones and online access to siriusxm.com.
We believe this agreement with Ford will boost the company’s top line and serve as long-term growth driver for the company. SIRIUS XM believes that new cars sold with satellite radios should toll 11 million in 2014 as against 10.7 million last year. Moreover, the figure is expected to double in the next five years. As a result, management remains highly optimistic about achieving nearly $100 million in revenues in 2014 alone from its connected vehicle services business.
SIRIUS XM’s agreement with Ford further indicates that the company is diversifying its business model from being a pure radio entertainment provider to a web-based safety and navigation information provider for cars in the face of competitive threat from several fronts.
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