GPS - Gift of the Year

Includes: AVGO, GRMN, SIRF
by: Eric Savitz

GPS-based portable navigation devices will be “the gift of the year” this holiday season, Jefferies & Co.’s Adam Benjamin asserts in a research note this morning.

Benjamin says an analysis of Black Friday sale pricing at a variety of retail stores show average discounts of 43% on GPS devices, much sharper reductions than the average 25% cut last year, with big cuts on devices from Garmin (NASDAQ:GRMN), TomTom, Magellan and and Mio. Benjamin says that in 2006, Mio and Magellan “stole the show,” offering 50% discounts and taking over 35% market share that week. “Garmin and TomTom have learned from their mistake last year and are cutting pricing 40%-50% across the board,” he says, with the low-end reaching $119 for the TomTom ONE and $169 for the Garmin nuvi 200.

Benjamin says the low pricing should drive the market to 10 million units this year, quadruple last year’s level. He says the high demand should be good news in particular for GPS chip maker SiRF (SIRF); it should be a positive, though to a lesser degree, for Broadcom (BRCM).

Meanwhile, Benjamin says average price cuts for LCD TVs will be 23%, comparable to last year’s average 20% price cut. He says consumers willing to spend $1,000-$1,300 will be able to get a 46-inch LCD TV, compared to a 32-inch TV for the same price range last year. “Sharp will likely be the most significant beneficiary of Black Friday as it appears the most aggressive and attractive,” he says.