Garmin, Navteq Soaring; GPS Is Hot

Wow, the GPS market is red-hot. Tuesday night, digital maps provider Navteq (NVT) reported a blow-out second quarter and impressive full-year guidance, citing “surging growth” in maps for portable devices and “the relative stability” of its automotive business despite unfavorable car sales trends.

Wednesday morning, Garmin (GRMN), which makes GPS devices, reported equally impressive results. For the second quarter, Garmin reported revenue of $742 million and EPS of 98 cents; the Street had been expecting $645.7 million and 73 cents.

For the full year, Garmin sees revenue of more than $2.8 billion, with EPS of more than $3.15; the Street has been at $2.62 billion and $2.90.

Garmin also increased its annual cash dividend to 75 cents a share from 50 cents.

Garmin noted particular strength in its automotive/mobile segment, which grew 99% year over year to $508 million. The company’s aviation segment grew 39%, while the outdoor/fitness segment grew 9%, and marine expanded 59%.

Garmin Wednesday morning is up $5.10, or 6% to $89; Navteq is up $6.96, or nearly 13%, to $61.07.

NVT vs. GRMN 1-yr chart:

Comments

[scott146:]

I think that the size of the market in unit volume for handheld GPS receivers is going to continue to mushroom as the price for a basic unit drops below $100. At that point, a lot of people who don't want to pay to have a system installed in their car will be willing to buy the handheld as a much cheaper navigation alternative. I have been keeping an eye on the low-end models and have seen some at around $95 on sale.

I see the handheld as a product that should have a lot of success in the US with the 18-49 middle class male demographic. The gadget factor of this product is appealing to a lot of men, and not having to stop and ask for directions would be a huge selling point as well.

2007 Aug 01 04:03 PM