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From Staff Reports
In one of those ultimate business ironies, just days after its shares were pounded by investors over fears it would flounder because of competition from "smart" cell phones, GPS-maker Garmin Ltd. (GRMN) yesterday (Wednesday) introduced a $99 software package that turns "smart" wireless phones into high-end navigation units.
The shares of the Olathe, Kansas-based Garmin have fallen by more than 20% this week because cell-phone giant Nokia Corp. (NOK) on Monday announced it was buying digital mapmaker Navteq (NVT) in a deal valued at $8.1 billion. The Navteq purchase is a clear shot at Apple Inc. (AAPL), whose iPhone comes equipped with mapping and navigation provided by Google Inc. (GOOG). It also puts pressure on GPS-system-maker Garmin: Investors were clearly disappointed that Garmin wasn't a bidder for Navteq, and are apparently also concerned that the buyout by the world's No. 1 cell-phone maker will leave the once-high-flying Garmin at a huge competitive disadvantage.
Garmin is one of the industry's top producers of portable global positioning system (GPS) units, including several that received No. 1 ratings from such publications as Consumer Reports. But Garmin's shares are now down more than $26 from their recently achieved 52-week high of $122.78. Navteq provides digital map information for automobile navigation systems, mobile phones and devices and Web sites. Navteq also owns Traffic.com, an interactive Web site that gives users up-to-the-minute traffic information in their area. Last year, Navteq booked revenue of $582 million, according to a Nokia's press release announcing the Navteq buyout.
Some investors believe that Garmin will make a counteroffer for Navteq. And still others say that Garmin has long-term contracts with Navteq, meaning that even as part of Nokia the digital map firm won't be able to "freeze out" and cease dealing with Garmin.
And then yesterday, Garmin unveiled Garmin Mobile XT, a unique, all-in-one software solution that turns select smart phones with internal global positioning systems (GPS) into high-end Garmin navigation units. The "Plug-N-Play" mobile phone application software is said to blend in seamlessly with the phone's built-in GPS unit, providing users with navigation capabilities anywhere in North America or Europe, the company said. Once installed, consumers have access to pre-loaded maps, and premium data such as fuel-price and real-time traffic alerts.
"It's a one-time investment that gives customers full-featured GPS navigation on their smart phone whenever and wherever they need it, including areas outside of wireless network coverage," Charles Morse, Garmin's director of mobile marketing, told journalists.
News and Related Story Links:
- Money Morning News:
Nokia Announces $8.1 Billion Acquisition of Navteq.
- Information Week: