|To: JakeStraw who wrote (184)||10/1/2007 3:52:56 AM|
|Nokia in Talks to Acquire Navteq|
Interest in a Deal Reflects Move Into Mobile Services As Threat to Handsets Rises
By DENNIS K. BERMAN and JASON SINGER
October 1, 2007; WSJ
Finnish mobile-phone giant Nokia Corp. last night was deep in discussions to purchase navigation-software maker Navteq Corp., people familiar with the matter said, marking what would be one of its largest-ever corporate acquisitions.
With a $7.61 billion market capitalization, Chicago-based Navteq is one of the world's leaders in electronic mapping, which enables in-vehicle navigation devices and a new generation of mobile-phone applications used for shopping, emergency services and advertising.
The two sides have been in deep discussions over the past few weeks, said the people familiar with the matter. It was still possible those discussions could crumble over a series of last-minute issues. A Navteq spokesman didn't return a request for comment. Nokia representatives were unavailable for comment.
Navteq's stock price, up 75 cents to $77.97 Friday in 4 p.m. New York Stock Exchange composite trading, has more than doubled this year.
Nokia's interest in Navteq represents a vigorous move into the mobile-services arena, where Nokia has already been building a suite of products around games and music. These types of services have been in development for years by mobile-phone makers like Nokia, as well as by telecom service providers. Around the telecommunications world, there is a growing sense that these services are finally ready for wide-scale consumer adoption.
Nokia CEO Olli-Pekka Kallasvuo has been aggressively steering the Finnish giant, which has a market capitalization of $149 billion, into a software and services company. Last year he separated the company's infrastructure business, placing it into a joint venture with Germany's Siemens AG.
Yet Nokia still receives the vast majority of its revenue and profit from selling handsets. The company sells more than one out of every three handsets around the globe. Asian companies have made this business extremely competitive, with their own lines of cheaper mobile handsets. For Nokia, the move into services is designed to persuade customers to pick the Nokia brand amid so many other choices.
Nokia shares have climbed nearly 90% this year; on Friday, the company's American depositary receipts were at $37.93 in 4 p.m. Big Board trading. Mr. Kallasvuo has been making a series of small acquisitions over that time, focused around music and gaming. But no deal has carried the price tag of a Navteq, which trades at about 54 times its current earnings. It reported net income for the fiscal second quarter ended July 1 of $40.9 million on revenue of $202.3 million.
Navteq was founded in 1985, built around the premise of building turn-by-turn navigation directions through digitized maps. Since then, it has created digital maps in 69 countries across six continents.
The company's products are used inside a number of automobiles, including models from Chrysler LLC, Ford Motor Co., Mercedes-Benz and Volkswagen AG's VW brand. It also makes after-market devices for cars and separate portable devices.
Nokia and Navteq already have a business relationship, where Navteq provides information for Nokia's mobile phones.
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|From: tech101||10/5/2007 2:04:13 PM|
Navteq: Might Another Bidder Enter The Fray?
By Thomas Kelly
posted on: October 04, 2007 | about stocks: NVT
A lot of shareholders in Navteq (NVT) have left the building and pocketed gains in the wake of Nokia’s cash bid of $78 per share for the company. This is clearly going to be one of the most influential deals of the year, but I’m left questioning whether Nokia’s $78 per share offer will be the ultimate end result here.
The decline in shares of GPS maker Garmin (GRMN) in the wake of the deal is perhaps pointing the way forward for a potential bidding war. Although Nokia clearly has more resources in the fight to win Navteq, Garmin is certainly feeling the heat for not making a bid for Navteq, and they may well be forced to rethink their strategy and take a stab a Navteq. While Garmin is going to be hard pressed to make a higher bid for Navteq due to its smaller size, it certainly is not inconceivable for the company to issue stock for the deal (which would likely be preferable for Garmin due to its premium valuation). Given the fact that the acquisition of NVT by Nokia poses a substantial long term threat to Garmin’s business model, it certainly isn’t out of the question that Garmin could muster all their financial strength to challenge the Nokia deal.
As well, it is possible that another bidder could enter the fray and sweeten the deal. Past rumors have mentioned Google and Microsoft as potential acquirers, and although I think these are certainly long-shots, the possibility is still there.
Overall, Navteq’s shares represent and interesting conservative opportunity over the next few months. With the stock currently trading below $76, the stock is trading at about a 3% discount to Nokia’s offer. Given that the bid is an all-cash offer and Nokia has plenty of cash on hand, the deal is virtually assured, and should close in the first quarter of 2008. Therefore, Navteq shares are offering a 6% annualized return with very little risk, as well as a substantial potential upside should Nokia’s bid be challenged by likes of Garmin, Google, or another suitor.
At the very least, Navteq shares certainly look more attractive than any other short-term money market investment, and the potential upside leads me to believe that this is an attractive risk/reward. With a 6% annualized return virtually risk-free, Navteq looks like a nice place to stash some extra cash over the next few months. With that in mind, I’ve bought a moderate position in the stock at $75.79, and I’m content to sit on my hands over the next few months and wait to see if anything develops.
Disclosure: Author is long NVT
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|From: tech101||10/12/2007 9:50:40 PM|
|GPS Leader Garmin May Be Headed In Cell Phone Direction|
Friday October 12, 7:00 pm ET
Patrick Seitz, Investor's Business Daily
In a list of the great tech rivalries, it might be time to add Nokia vs. Garmin.
No. 1 cell phone maker Nokia (NYSE:NOK - News) raised eyebrows this month when it announced a big acquisition that encroaches on Garmin's navigation device business. But Garmin (NasdaqGS:GRMN - News), the leader in navigation, or GPS, devices, might respond in kind. It's said to be mulling a move into the cell phone business.
"Garmin knows it could build one hell of a fantastic wireless handset," said Jeff Evanson, an analyst with Dougherty & Co.
Based on talks he has had with Garmin employees, Evanson says he believes the company will come out with a GPS-enabled mobile phone next year.
Several other analysts also see that possibility, though it's uncertain just how deeply Garmin might dive into the cutthroat mobile phone business.
"There's a case to be made (at Garmin) for an evolution toward a smart phone," said Richard Valera, an analyst with Needham & Co.
Garmin already is adding more wireless capabilities to its auto and portable navigation devices so they can receive real-time traffic, gas price, weather and other data.
But Valera says Garmin isn't likely to make a frontal assault on the mainstream cell phone market. Instead, he sees it going after a niche market for people who want a handset with a heavy navigation focus.
This wouldn't be a first for Garmin. It introduced NavTalk, the world's first GPS-equipped cell phone, in 1999. The product was sold mostly in Europe, but was discontinued a few years later.
Garmin spokeswoman Jessica Myers says the company hasn't announced any plans to make a new cell phone.
"We announce 70 products a year so there are a lot of concepts and ideas that we look at, however that's not in the immediate plans," she said. "I can't say we're never ever going to do it. I mean, we've already done it."
A Confident Company
Garmin already is active in the mobile phone space, making GPS applications for other companies' cell phones, she points out.
But the cell phone industry and Garmin have changed a lot since 1999's NavTalk, Evanson says.
"Garmin now believes there's no one in the world that they can't go head-to-head with in developing consumer electronics," Evanson said. "That confidence in their engineering and design capability is an important mental shift at the company that's happened in the last couple of years. Now, all consumer electronics categories are in play."
Yair Reiner, an analyst with CIBC World Markets, also believes Garmin might well come out with a cell phone. "But the handset business isn't an easy one to get into," he said. "Even Apple is finding that out."
Speculation on Garmin's re-entry into the mobile phone business comes at an uneasy time for the Olathe, Kan.-based company.
Nokia announced Oct. 1 a deal to buy digital mapmaker Navteq (NYSE:NVT - News). Garmin gets almost all of its digital maps from Navteq. Meanwhile, rival GPS device maker TomTom is buying the other major digital mapmaker, Tele Atlas. Navteq and Tele Atlas have a duopoly in the digital map business.
While Nokia and TomTom insist they'll run the digital map firms as independent units, the deals would put Garmin in the position of having to get maps from its rivals.
Garmin has worked closely with Navteq. It's shared sensitive information such as product road maps and production volumes with its map supplier, Reiner says.
Garmin could see its profits squeezed as prices for digital maps stabilize or perhaps rise, American Technology Research analyst Rob Sanderson said in a research note. Map prices have declined at double-digit rates for the past few years, but if these two acquisitions go through, map prices are likely to hold steady or rise, he says.
Garmin gets about 70% of its sales from auto and portable navigation devices. The portable devices attach to windshields or dashboards and display digital maps and points of interest. They give directions to drivers using data from GPS, or global positioning system, satellites.
Market penetration is still low for such devices in the U.S. But with aggressive price cuts, more consumers are expected to pick up the handy tools.
A typical portable navigation device, or PND, could sell for 50% less this holiday season than a year ago, Evanson says, putting many products in the $200-$300 range.
Targets Many Markets
Garmin should have a good holiday season so long as sales volume makes up for lower prices, says Jonathan Braatz, an analyst with Kansas City Capital Associates.
Garmin differs from rivals, including TomTom and Cobra Electronics (NasdaqGM:COBR - News), in that it has a diversified business centered on navigation products. Besides its devices for cars, Garmin makes navigation products for the aviation, marine, outdoor and fitness markets. Those products range from high-end airplane avionics gear to armband gadgets for long-distance runners.
This year, Garmin expects overall sales to exceed $2.8 billion, up 58% over last year. It sees earnings per share of more than $3.15, a 34% jump.
Garmin focuses on delivering high-quality wares that are easy to use and offer a lot of utility for consumers, says Garmin Chief Financial Officer Kevin Rauckman.
The company, he says, expects to spend more than $150 million this year on R&D. Garmin has almost 300 patents issued and another 200 pending applications.
For the last few years, Garmin also has worked to raise its brand profile through advertising. It expects to spend about $175 million on ads this year, Rauckman says.
Garmin has made six acquisitions in the last two years and has three pending. It has bought exclusive distributors in France and Germany and has deals pending to buy distributors in Spain, Italy and Denmark.
Garmin is the No. 1 GPS products maker in the U.S., but trails Amsterdam-based TomTom in Europe. Garmin hopes buying its major European distributors will help it to better compete against TomTom.
Besides buying distributors, Garmin has purchased several small tech companies. They include Nautamatic Marine Systems, a maker of boat autopilot systems, and Digital Cyclone, a provider of real-time weather data to mobile devices. It also bought Dynastream, a maker of personal monitoring technology, such as heart-rate monitors for sports and fitness products.
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|From: tech101||10/28/2007 6:03:48 PM|
October 24, 2007, 5:07 pm
Google Analyst Day: CEO Eric Schmidt
Posted by Eric Savitz
The last speaker at the Google (GOOG) analyst meeting today is CEO Eric Schmidt.
Schmidt says it has become clear we are at the beginning of a massive transition to cloud computing. A global transition from one form of information sharing to another, of one form of computing to another. We can now actually see an integrated strategy for the company.
Schmidt says the strategy is search, ads, apps. Search is not a solved problem. We have no way of capturing your expert insights immediately back into search. How could we take the knowledge from the enormous number of people who use Google every day and put it into search. Makes sense for us to get higher quality content; the kind of insightful thing we are seeing all over the Web, thinking of Wikipedia and other examples.
In a company where search is the view we have of the world, he says, easy to say everything is a search problem. People with Google Docs, just leave everything there and just search. Can’t do it with any other system. Same with Gmail. People leave all there email, and leave it there. Whether desktop or enterprise or global search, or specialized content search, problem of search is powerful, fundamental and not completely solved.
On advertising: There is a different model that has been successful for us, that ads have valuable in and of themselves. Use information we glean to provide extremely targeted ads. Everything we know tells us that model should work in every market; we believe value to end user is in a targeted ad. You say, you don’t want any ads at all, he says, but actually you do.
Principle of targeting is the underlying principle, and we are not done with that by far.
In applications side, here is the story of Calendar. They were exciting about 500 years ago. Wrong. Turns out, calendars are a simple metaphor. You compare them with friends, families. Fundamental, the first example of why the new paradigm is fundamentally different than what we grew up. Makes it viral, powerful.
Google Docs: trying to solve different problem from market leader. (Wouldn’t want to mention MSFT Office specifically, would he?) Most people I know would fundamentally prefer to throw out infrastructure and use our enterprise product. Actually possible for small business to outsource everything to GOOG for $50 a year. Looks like it can get pretty big. Very significant organizations trying it. Users want sharing, accessibility.
We’re just at the beginning, he says. A coherent strategy that solves real problems that end users have. We used to just talk about it. We have customers, teams, products; web service paradigm makes the world a quicker game. Sum of all that is instead of static release cycle, it is experience that is constantly changing. Sets up tremendous innovation.
Schmidt (suit, tie) is now asking Sergey Brin (wearing a white t-shirt, black sweats and Crocs) and George Reyes (suit, no tie) to join him on stage for a Q&A session. They are sitting on tall bar stools. Brin is in the middle; he looks like a guy in custody, sitting between his two lawyers.
Q: On Google maps, are costs higher with Nokia/Nateq and TomTom/TeleAtlas deals?
Brin: Neither deal closed, but it is pretty small component to what our maps to. And we have other vendors for road data. We have satellite, street level, 3D model data. Our geographic products encompass a whole range of things.
Q: On Google apps, can you reach 5%-7% in small/medium sized business segment? Is adoption coming at expenses of Office? What attach rate for premium subscription? Challenges in accelerating adoption?
Schmidt: Very dangerous for us to predict penetration rate. Many companies still not Internet savvy. We have best tools for them to publish and advertising their products. Really about penetration rate of Internet as a whole. We know our presence in market has affected pricing, but not about market share. We’re moving very quickly; people have to learn about it, and convert way their infrastructure works.
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|To: tech101 who wrote (192)||11/3/2007 4:02:23 PM|
|Mapping the Road to Riches |
By Jay Palmer
Word Count: 555 | Companies Featured in This Article:
Garmin, TomTom, Navteq , Nokia, Sony
I'LL ADMIT IT: I'M OLD ENOUGH TO RECALL that the very first satellite-based personal navigation devices told you your location using only latitude and longitude. That may have helped seasoned mariners, but not those of us trying to find the best route to the mall. Luckily, today's navigation devices come loaded with detailed maps. Some even show you where you are via Google Earth-type satellite photos.
All of which explains why the two biggest makers of the devices, Kansas-based Garmin (ticker: GRMN, market value $22 billion) and its Dutch rival TomTom (TOM2, market value $6.05 billion), are facing off in ...
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