Today, GPS Chip Maker SIRF Technologies (SIRF) dropped over 50% in value. They reported bad earnings, and bad guidance. SIRF says there is demand for GPS chips, but pricing has gone down over the last year, putting strain on SIRF.
There is weakness in the Personal Navigation Device Market, but in the future, GPS chips in the wireless handsets are going to be a big growth area.
Despite this long term bullishness, investors should still be careful about individual cases in the GPS area, and investors still have to control their losses. SIRF and Garmin (GRMN), another company in the Global Positioning arena, have been going down big percentages in the weeks prior, and if an investor had the discipline to sell, that investor would have saved themselves from much larger losses.
Even with long term bullish trends, you still have to control losses in individual stock positions!
Showing posts with label SIRF. Show all posts
Showing posts with label SIRF. Show all posts
Tuesday, February 5, 2008
Friday, October 12, 2007
Another Global Positioning Company Gets Bought out: NGPS
The consolidation in the Global Positioning market continues.
Recent buyouts include:
And the most recent company:
Novatel Inc. (NGPS), the Canadian high precision global navigation satellite system company (GNSS), is bought out by Swedish comgolomerate Hexagon for $390 Million.
Now, there are only three pure plays on Global Positioning publicly traded in the US:
There should be high demand for these remaining companies as Location Based Services will continue to be a large growth area over many years.
Recent buyouts include:
- Pitney Bowes (PBI) buys GPS Software Maker MapInfo (formerly: MAPS)
- GPS Company Trimble Navigation (TRMB) buys @Road.
- Semiconductor Chip company Broadcom (BRCM) buys privately held GPS chip company Global Locate
- GPS Equipment company Tom-Tom (TOM2.AS) buys privately held Digital Map company Tele-Atlas
- Wireless handset maker Nokia (NOK) buys Digital Map company Navteq (NVT)
And the most recent company:
Novatel Inc. (NGPS), the Canadian high precision global navigation satellite system company (GNSS), is bought out by Swedish comgolomerate Hexagon for $390 Million.
Now, there are only three pure plays on Global Positioning publicly traded in the US:
- Garmin (GRMN): GPS Equipment
- Sirf Technologies (SIRF): Makes Global Positioning Semiconductors
- Trimble Navigation (TRMB): GPS Equipment
There should be high demand for these remaining companies as Location Based Services will continue to be a large growth area over many years.
Monday, October 1, 2007
Time to Take Profits in Garmin (GRMN) and Overweight Sirf Technologies (SIRF)?
The time to take some profits and underweight GPS device maker Garmin (GRMN) and overweight Global Positioning Chip maker Sirf Technologies (SIRF) might be now.
When cell phone maker Nokia (NOK) recently announced that they were buying Digital Map maker Navteq (NVT) for $8.1 Billion, Garmin's stock price went down around 10%.
Garmin had a close relationship with Navteq, and is a big customer of Navteq. Since the Digital Map space was a duopoly (Navteq (NVT), and privately held Tele-Atlas which was bought by European GPS Device Maker Tom-Tom (TOM2.AS)), Garmin (GRMN) might be squeezed out.
At the moment, Garmin (GRMN) is still reasonably priced with a forward PE of 27, five year analyst growth estimate of 20%, for a reasonable Price Earnings to Growth Ratio of 1.35 (a PEG over 2.0 is overvalued). In addition the automotive GPS market is growing very rapidly, and Garmin is ready to take advantage of this with around a 50% market share. There is also very low navigation device penetration of around 10%, so a lot of the growth is still ahead for Garmin (GRMN).
Garmin (GRMN) does seem to belong in a growth portfolio. But at the same time, the Nokia and Navteq deal signals a change in how the industry is positioning itself for the future.
Why would Nokia be interested in buying Navteq, a Digital map Maker? Global Positioning Services and Applications are a big growth area, and Nokia is aiming to position itself aggressively. GPS applications on cell phones and other mobile converged devices and anything that moves are the next big thing.
One big beneficiary of this is GPS chip device maker Sirf Technologies (SIRF). The company is the dominant GPS chip company and holds a 90% market share, though some say competition can reduce the market share to 70%. Still, a 70% market share in a very large growth business is still a very good market share.
For several months, SIRF's stock price had not been performing well, and has lagged other stocks in the location based service area such as Garmin (GRMN) and Navteq (NVT). Aside from earnings misses, they previously mentioned that there was a slow ramp-up with one wireless customer. Later news seemed to reverse this, as Motorola, the #2 cell phone maker, announced it was going to be using Sirf's GPS chips.
With many growth stocks with forward PE ratios above 30, Sirf Technologies (SIRF) has a PE of only 19, a five year analyst growth estimate of 26.6%, for a very cheap PEG ratio of 0.71 (PEG under 1.0 is very cheap).
There is also great consolidation in the industry (Tom-Tom Buys Tele-Atlas, Broadcom (BRCM) buys Global Locate, Nokia (NOK) buys Navteq (NVT), Trimble (TRMB) buys AtRoad, Pitney Bowes buys Mapinfo (MAPS)), and the demand for pure plays on Location Based Services will be at a premium. With a market cap of less than $1 Billion, who knows if Sirf Technologies (SIRF) will eventually be bought out.
Also, those mutual funds holding Navteq (NVT) and already owning Nokia (NOK), might have to take profits in Navteq and reallocate their capital elsewhere, so they don't overweight Nokia (NOK) too much. Are the mutual fund managers thinking of reallocating the profits in Sirf Technologies (SIRF) as well?
So yes, Garmin (GRMN) may still belong in a Growth portfolio, but maybe now is the time to take some profits and start overweighting companies such as Sirf (SIRF) Technologies.
When cell phone maker Nokia (NOK) recently announced that they were buying Digital Map maker Navteq (NVT) for $8.1 Billion, Garmin's stock price went down around 10%.
Garmin had a close relationship with Navteq, and is a big customer of Navteq. Since the Digital Map space was a duopoly (Navteq (NVT), and privately held Tele-Atlas which was bought by European GPS Device Maker Tom-Tom (TOM2.AS)), Garmin (GRMN) might be squeezed out.
At the moment, Garmin (GRMN) is still reasonably priced with a forward PE of 27, five year analyst growth estimate of 20%, for a reasonable Price Earnings to Growth Ratio of 1.35 (a PEG over 2.0 is overvalued). In addition the automotive GPS market is growing very rapidly, and Garmin is ready to take advantage of this with around a 50% market share. There is also very low navigation device penetration of around 10%, so a lot of the growth is still ahead for Garmin (GRMN).
Garmin (GRMN) does seem to belong in a growth portfolio. But at the same time, the Nokia and Navteq deal signals a change in how the industry is positioning itself for the future.
Why would Nokia be interested in buying Navteq, a Digital map Maker? Global Positioning Services and Applications are a big growth area, and Nokia is aiming to position itself aggressively. GPS applications on cell phones and other mobile converged devices and anything that moves are the next big thing.
One big beneficiary of this is GPS chip device maker Sirf Technologies (SIRF). The company is the dominant GPS chip company and holds a 90% market share, though some say competition can reduce the market share to 70%. Still, a 70% market share in a very large growth business is still a very good market share.
For several months, SIRF's stock price had not been performing well, and has lagged other stocks in the location based service area such as Garmin (GRMN) and Navteq (NVT). Aside from earnings misses, they previously mentioned that there was a slow ramp-up with one wireless customer. Later news seemed to reverse this, as Motorola, the #2 cell phone maker, announced it was going to be using Sirf's GPS chips.
With many growth stocks with forward PE ratios above 30, Sirf Technologies (SIRF) has a PE of only 19, a five year analyst growth estimate of 26.6%, for a very cheap PEG ratio of 0.71 (PEG under 1.0 is very cheap).
There is also great consolidation in the industry (Tom-Tom Buys Tele-Atlas, Broadcom (BRCM) buys Global Locate, Nokia (NOK) buys Navteq (NVT), Trimble (TRMB) buys AtRoad, Pitney Bowes buys Mapinfo (MAPS)), and the demand for pure plays on Location Based Services will be at a premium. With a market cap of less than $1 Billion, who knows if Sirf Technologies (SIRF) will eventually be bought out.
Also, those mutual funds holding Navteq (NVT) and already owning Nokia (NOK), might have to take profits in Navteq and reallocate their capital elsewhere, so they don't overweight Nokia (NOK) too much. Are the mutual fund managers thinking of reallocating the profits in Sirf Technologies (SIRF) as well?
So yes, Garmin (GRMN) may still belong in a Growth portfolio, but maybe now is the time to take some profits and start overweighting companies such as Sirf (SIRF) Technologies.
Sunday, September 16, 2007
GPS Enabled Cell Phones: Find Friends/Businesses on Map, Emergency 911, and opportunity for SIRF, GOOG and others
GPS Chips inside Cell Phones: New Applications and How to Profit.
1. Find Friends on Map
Want to find friends and family on the map? It's easy.
There is a well funded startup called Loopt which does just that. Using selected cell phones with GPS (Global Positioning System) capability, mostly from Boost Mobile, Sprint, and Nextel, Loopt can let you find friends and family on a map (with their approval), for a subscription fee.
This Mobile Networking Application is just the beginning of location based services which take advantage of GPS chips inside a cell phone. This service allows users to be able to interact with other users based on geographical location.
2. Let Emergency 911 Responders Find People
Another important mobile application of the GPS chip in a cell phone is Emergency 911 service. With GPS chips inside cell phones, now, Emergency 911 Responders can easily find the location of the person who needs help. This will save many lives!
Aside from companies who setup the E911 system, companies which provide GPS chips to cell phones, such as Sirf Technology (SIRF), who makes the GPS chips, will benefit, as well as companies such as Navteq (NVT) who provide digital maps, which are especially useful to GPS location based service applications.
3. Connect Business to Mobile Users
Another important application of GPS chips on cell phones involves connecting users to businesses and advertisers. With the original Navigation Device (non-cell phone) from companies such as Garmin (GRMN) or Tom-Tom (TOM2.AS), one could use the device to search for a local business such as a restaurant, hotel, or gas station, even if that business is a few miles away from a major freeway. Businesses that have their information embedded in these Navigation Devices will see increased business and revenue. Any company that profits from having businesses pay to be included in the Navigation Device Search function also would benefit.
Now if this Portable Navigation Device would be extended to GPS enabled cell phones, this market would explode. Now, if a GPS enabled cell phone could somehow connect to a central information center to help connect mobile users to particular business, that would allow companies who provide local business information to mobile users to profit.
A company such as Google (GOOG) would profit. They already have Google Local Search, Google Maps, Internet Search, and mapping services. If a mobile user could interact with Google, Google would read the mobile cell phones GPS location, and connect the mobile user with businesses near that area.
Profit from GPS Chips on a Cell Phone
The GPS Chip on a Cell Phone is still in its infancy. Sirf Technologies (SIRF), previously cited some problems as a wireless customer was slow to ramp up to their GPS chip in a cell phone. Sirf (SIRF) has recently bounced back as Motorola, the #2 cell phone maker, will be using Sirf's GPS chips in their cell phones.
Sirf currently has a 90% share in the GPS chip market for Personal Navigation Devices. However, Bank of America analyst Sumit Dhanda says that Sirf's market share could go down to 70% share thanks to competition from STMicroelectronics (STM), Taiwan's MediaTek, and Broadcom (BRCM), which recently bought private company Global Locate for less than $200 Million.
Analysts have also said that GPS customers such as Garmin (GRMN) are looking for "dual-source key inputs."
While there is pressure on Sirf's market share, Sirf is still the dominant leader, and will continue to produce the best chips.
Current Valuation is still very reasonable. Sirf (SIRF) has a forward PE of 16.37, five year estimated growth of 26.62%, for a very cheap Price Earnings to Growth (PEG) ratio of 0.61, which is very cheap (PEG less than 1 is very cheap).
Compare this with Broadcom (BRCM) which has a forward PE of 25.36, 5 year growth rate of 22.37%, for a PEG of 1.13.
The company has virtually no debt, is cash rich ($4 cash per share for a $20 stock), and belongs to a very rapidly growing segment.
Sirf (SIRF) has shown recent momentum, and still remains a long term buy as its performance has lagged other Location Based Service companies such as Garmin (GRMN) and Navteq (NVT).
Location Based Service Companies
1. Find Friends on Map
Want to find friends and family on the map? It's easy.
There is a well funded startup called Loopt which does just that. Using selected cell phones with GPS (Global Positioning System) capability, mostly from Boost Mobile, Sprint, and Nextel, Loopt can let you find friends and family on a map (with their approval), for a subscription fee.
This Mobile Networking Application is just the beginning of location based services which take advantage of GPS chips inside a cell phone. This service allows users to be able to interact with other users based on geographical location.
2. Let Emergency 911 Responders Find People
Another important mobile application of the GPS chip in a cell phone is Emergency 911 service. With GPS chips inside cell phones, now, Emergency 911 Responders can easily find the location of the person who needs help. This will save many lives!
Aside from companies who setup the E911 system, companies which provide GPS chips to cell phones, such as Sirf Technology (SIRF), who makes the GPS chips, will benefit, as well as companies such as Navteq (NVT) who provide digital maps, which are especially useful to GPS location based service applications.
3. Connect Business to Mobile Users
Another important application of GPS chips on cell phones involves connecting users to businesses and advertisers. With the original Navigation Device (non-cell phone) from companies such as Garmin (GRMN) or Tom-Tom (TOM2.AS), one could use the device to search for a local business such as a restaurant, hotel, or gas station, even if that business is a few miles away from a major freeway. Businesses that have their information embedded in these Navigation Devices will see increased business and revenue. Any company that profits from having businesses pay to be included in the Navigation Device Search function also would benefit.
Now if this Portable Navigation Device would be extended to GPS enabled cell phones, this market would explode. Now, if a GPS enabled cell phone could somehow connect to a central information center to help connect mobile users to particular business, that would allow companies who provide local business information to mobile users to profit.
A company such as Google (GOOG) would profit. They already have Google Local Search, Google Maps, Internet Search, and mapping services. If a mobile user could interact with Google, Google would read the mobile cell phones GPS location, and connect the mobile user with businesses near that area.
Profit from GPS Chips on a Cell Phone
The GPS Chip on a Cell Phone is still in its infancy. Sirf Technologies (SIRF), previously cited some problems as a wireless customer was slow to ramp up to their GPS chip in a cell phone. Sirf (SIRF) has recently bounced back as Motorola, the #2 cell phone maker, will be using Sirf's GPS chips in their cell phones.
Sirf currently has a 90% share in the GPS chip market for Personal Navigation Devices. However, Bank of America analyst Sumit Dhanda says that Sirf's market share could go down to 70% share thanks to competition from STMicroelectronics (STM), Taiwan's MediaTek, and Broadcom (BRCM), which recently bought private company Global Locate for less than $200 Million.
Analysts have also said that GPS customers such as Garmin (GRMN) are looking for "dual-source key inputs."
While there is pressure on Sirf's market share, Sirf is still the dominant leader, and will continue to produce the best chips.
Current Valuation is still very reasonable. Sirf (SIRF) has a forward PE of 16.37, five year estimated growth of 26.62%, for a very cheap Price Earnings to Growth (PEG) ratio of 0.61, which is very cheap (PEG less than 1 is very cheap).
Compare this with Broadcom (BRCM) which has a forward PE of 25.36, 5 year growth rate of 22.37%, for a PEG of 1.13.
The company has virtually no debt, is cash rich ($4 cash per share for a $20 stock), and belongs to a very rapidly growing segment.
Sirf (SIRF) has shown recent momentum, and still remains a long term buy as its performance has lagged other Location Based Service companies such as Garmin (GRMN) and Navteq (NVT).
Location Based Service Companies
Thursday, August 9, 2007
Stocks Holding Up Despite a Big Down Dow 387 Day (Aug. 9, 2007)
The Dow Jones went down 387 points today, for a loss of 2.83% to end at 13270.68. But despite this big drop, there are stocks which went up today.
Here are a few of those stocks on my screen that went up despite a big drop in the market.
1. Leucadia (LUK): (Up 6% today)
Leucadia (LUK) is a company that many call a mini Berkshire Hathaway (BRK.B), Warren Buffet's Company. Management is excellent, led by Guru Investor Ian Cumming and Joseph Steinberg. In 1978, Cumming and Steinberg banded together to take control of the company for $100,000 of their own money and $1.2 million from others to grow it to a $10 Billion company today. Both are still active in the company and as of 2007, Mr. Cumming is 65 and Mr. Steinberg is 63 years old.
Leucadia is a holding company that uses a deep value investing approach, buying distressed companies at discount prices, and sell them for profits.
In a shareholder letter, Mr. Cumming and Mr. Steinberg say:
The company's stock has gone up recently on good volume and is now very near its all time high. In March 2007, they announced a stock buy-back program.
2. Hansen Natural (HANS): (Up 1.43% today)
Hansen Natural is a $4.3 Billion Drink Company that specializes in the specialty Energy Drink Business. They have a forward PE of 23.44, a 5 year estimated growth rate of 28.59%, for a good PEG of 0.81 (less than 1 is good).
Hansen Natural (HANS) recently announced very good results, and JP Morgan analyst Dara Mohsenian said that catalysts include "improved distribution, contributions from the new Java Monster coffee drink, market share gains, entry into the on-premise market and international growth." Mohsenian also says that strong earnings growth "puts Hansen in a solid position to implement 16-ounce price increases if it chooses, which could be a very significant earnings per share driver" in an Associated Press article.
3. Central European Distribution Corporation (CEDC): (Up 2.51% today)
CEDC is a Polish Vodka producer and importer of other alcoholic and non-alcoholic beverages. The company is a $1.77 Billion company, with a Forward PE of 20.94, a five year estimated growth rate of 17.5% for a reasonable PEG of 1.19.
4. Middleby (MIDD): (Up 5.34% today)
Middleby is a $1.2 Billion company that designs, manufactures and sells cooking equipment and related products. The company has a forward PE of 21.06, a five year estimated growth rate of 18.5%, for a reasonable PEG of 1.13. It recently announced record earnings.
5. Allscripts Healthcare Solutions (MDRX): (Up 4% today)
Allscripts is a $1.44 Billion company that provides clinical software and connectivity and information systems for physicians. It has a forward PE of 32.07, a five year estimated growth rate of 30.44 for a reasonable PEG of 1.05. The company recently announced earnings.
6. Peabody Energy (BTU): (Up 3.17% today)
Peabody Energy is a $12.25 Billion US based Coal Company with a forward PE of 15.06, a five year estimated growth rate of 16.6% for a PEG of 0.91. The Coal sector has been beaten up recently, but a recent US Department of Energy report suggesting coal demand should increase this year is helping stocks in this sector.
7. Sirf Technologies (SIRF): (Up 4.28% today)
Sirf Technologies makes chips for the global positioning market. This $1 Billion company has a forward PE of 15, a five year estimated growth rate of 26.86% for a good PEG of 0.55 (less than 1 is cheap). The company has missed its quarter recently, and the stock is near its 52 week lows.
8. Stanley (SXE): (Up 2.61% today)
Stanley is a $500 Million company that makes information technology systems for the US defense and federal civilian government agencies. Forward PE is 19.11, five year estimated growth of 21.57%, for a good PEG of 0.89. On July 18, 2007, Navy announces a $23.1 Million Deal, where Stanley is one of the four military contractors which won the award.
9. Level 3 Communications (LVLT): (Up 4.87% today)
Level 3 is an $8.23 Billion company that is in the communications business in North America and in Europe. Among many telecom services, Level 3 also is in the fiber optic networking area.
Companies which show strength during big down days are companies you should watch out as they may lead the way when the market does come back.
(Do beware of short squeeze rallies though.)
Here are a few of those stocks on my screen that went up despite a big drop in the market.
1. Leucadia (LUK): (Up 6% today)
Leucadia (LUK) is a company that many call a mini Berkshire Hathaway (BRK.B), Warren Buffet's Company. Management is excellent, led by Guru Investor Ian Cumming and Joseph Steinberg. In 1978, Cumming and Steinberg banded together to take control of the company for $100,000 of their own money and $1.2 million from others to grow it to a $10 Billion company today. Both are still active in the company and as of 2007, Mr. Cumming is 65 and Mr. Steinberg is 63 years old.
Leucadia is a holding company that uses a deep value investing approach, buying distressed companies at discount prices, and sell them for profits.
In a shareholder letter, Mr. Cumming and Mr. Steinberg say:
"We tend to be buyers of assets and companies that are troubled or out of favor and as a result are selling substantially below the values which we believe there are. From time to time, we sell parts of these operations when prices in the market reach what we believe to be advantageous levels. While we are not perfect in executing this strategy, we are proud of our long term record…. We believe we are conservative in our accounting practices and policies and that our balance sheet is conservatively stated. To mutilate a hackneyed phrase, we are old dogs and we can't learn new tricks-we believe the ones we learned over the last 30 years continue to work just fine."
The company's stock has gone up recently on good volume and is now very near its all time high. In March 2007, they announced a stock buy-back program.
2. Hansen Natural (HANS): (Up 1.43% today)
Hansen Natural is a $4.3 Billion Drink Company that specializes in the specialty Energy Drink Business. They have a forward PE of 23.44, a 5 year estimated growth rate of 28.59%, for a good PEG of 0.81 (less than 1 is good).
Hansen Natural (HANS) recently announced very good results, and JP Morgan analyst Dara Mohsenian said that catalysts include "improved distribution, contributions from the new Java Monster coffee drink, market share gains, entry into the on-premise market and international growth." Mohsenian also says that strong earnings growth "puts Hansen in a solid position to implement 16-ounce price increases if it chooses, which could be a very significant earnings per share driver" in an Associated Press article.
3. Central European Distribution Corporation (CEDC): (Up 2.51% today)
CEDC is a Polish Vodka producer and importer of other alcoholic and non-alcoholic beverages. The company is a $1.77 Billion company, with a Forward PE of 20.94, a five year estimated growth rate of 17.5% for a reasonable PEG of 1.19.
4. Middleby (MIDD): (Up 5.34% today)
Middleby is a $1.2 Billion company that designs, manufactures and sells cooking equipment and related products. The company has a forward PE of 21.06, a five year estimated growth rate of 18.5%, for a reasonable PEG of 1.13. It recently announced record earnings.
5. Allscripts Healthcare Solutions (MDRX): (Up 4% today)
Allscripts is a $1.44 Billion company that provides clinical software and connectivity and information systems for physicians. It has a forward PE of 32.07, a five year estimated growth rate of 30.44 for a reasonable PEG of 1.05. The company recently announced earnings.
6. Peabody Energy (BTU): (Up 3.17% today)
Peabody Energy is a $12.25 Billion US based Coal Company with a forward PE of 15.06, a five year estimated growth rate of 16.6% for a PEG of 0.91. The Coal sector has been beaten up recently, but a recent US Department of Energy report suggesting coal demand should increase this year is helping stocks in this sector.
7. Sirf Technologies (SIRF): (Up 4.28% today)
Sirf Technologies makes chips for the global positioning market. This $1 Billion company has a forward PE of 15, a five year estimated growth rate of 26.86% for a good PEG of 0.55 (less than 1 is cheap). The company has missed its quarter recently, and the stock is near its 52 week lows.
8. Stanley (SXE): (Up 2.61% today)
Stanley is a $500 Million company that makes information technology systems for the US defense and federal civilian government agencies. Forward PE is 19.11, five year estimated growth of 21.57%, for a good PEG of 0.89. On July 18, 2007, Navy announces a $23.1 Million Deal, where Stanley is one of the four military contractors which won the award.
9. Level 3 Communications (LVLT): (Up 4.87% today)
Level 3 is an $8.23 Billion company that is in the communications business in North America and in Europe. Among many telecom services, Level 3 also is in the fiber optic networking area.
Companies which show strength during big down days are companies you should watch out as they may lead the way when the market does come back.
(Do beware of short squeeze rallies though.)
Tuesday, July 24, 2007
Growth in Location Based Services
Many people are now familiar with in-car Navigation Systems and online mapping services such as MapQuest, Yahoo Maps, and Google Maps. While there is growth in these areas, these applications would only be scratching the surface. According to research firm IDC, the Location Based Service (LBS) market will grow to a $3.1 Billion market by 2010.
Aside from the previously mentioned applications, there is a market for handheld GPS (Global Positioning System) devices, cell phones, and other advanced devices such as Research in Motion's (RIMM) BlackBerry, Apple (AAPL) iPhones, and Personal Digital Assistants which have a GPS chip inside. You can have applications that allow parents to track their children in case anything bad happens to them, applications that track your friends and family, emergency 911 tracking (imagine the lives saved!), applications that track fleets, and applications that allow users to get directions on their cell phone or assistance in finding the nearest gas station or restaurant. There are many applications and companies which have not been created yet!
In the Location Based Service world, there are several categories of companies:
Location Based Service Device Makers
These Location Based Service Devices mainly use the GPS system except for LoJack (LOJN), which uses wireless technology instead.
GPS Chip Makers
Digital Maps
Two companies, Tele-Atlas and Navteq (NVT), were a digital map duopoly. However, Tele-Atlas, a European Digital Map Company, was recently bought out by Global Positioning Device Maker Tom-Tom (TOM2.AS) for $2.6 Billion. Tele-Atlas's main competitor, Digital Mapmaker Navteq (NVT) rose 18% on July 23 on an analyst upgrade by UBS and wide speculation by analysts and many in Wall Street that Navteq could be acquired by Garmin (GRMN), Google (GOOG) or Microsoft (MSFT). So, at the moment, there are still only two dominant companies in the Digital Map area:
GPS Integrated Products
Garmin (GRMN) and TomTom (TOM2.AS) are not the only two consumer GPS device companies. We are in the middle of the trend where cell phones, and other portable devices will have GPS integration. Players in this area could be the handset makers, such as Apple (AAPL) and Research in Motion (RIMM).
GPS Service and Application Providers
Telecom Service Providers such as Sprint (S) or AT&T (T) could benefit by offering location based services and charging for added features. Traffic.com, a Navteq company, provides real time traffic data, usually for a fee.
Companies such as Google (GOOG) also stand to benefit from Location Based services. Two years ago, Google confirmed that it wanted to try to setup free wi-fi in San Francisco. Writer Om Malik reports that says that "the initial use of location-based services might be limited to more-focused and targeted advertising." A Google official said that the bid "was in line with Google’s thinking on delivering answers anytime anywhere to anyone, and looking beyond a desktop PC."
Other Players
Previously, there was a company MapInfo (formerly MAPS) that provided Location Based Service software. However, it was bought out by Pitney Bowes (PBI) for approximately $400 Million.
On February, 2007, Trimble Navigation (TRMB) bought out Fleet Tracking company AtRoad for around $500 Million.
All these acquisitions (MapInfo, Tele-Atlas, AtRoad, Global Locate) are part of the consolidation trend in the Location Based Services sector.
Future of Location Based Services
With the great growth and potential of Location Based Services, combined with all the consolidation in the industry, I see a very bright future for many companies in this sector. The companies in this sector are heading in the right direction.
Side Note: Geo-Caching, the Scavenger Hunt Hobby using GPS
The Main Geo-Caching Site.
WallStrip Video on GRMN and Geocaching.
Aside from the previously mentioned applications, there is a market for handheld GPS (Global Positioning System) devices, cell phones, and other advanced devices such as Research in Motion's (RIMM) BlackBerry, Apple (AAPL) iPhones, and Personal Digital Assistants which have a GPS chip inside. You can have applications that allow parents to track their children in case anything bad happens to them, applications that track your friends and family, emergency 911 tracking (imagine the lives saved!), applications that track fleets, and applications that allow users to get directions on their cell phone or assistance in finding the nearest gas station or restaurant. There are many applications and companies which have not been created yet!
In the Location Based Service world, there are several categories of companies:
Location Based Service Device Makers
These Location Based Service Devices mainly use the GPS system except for LoJack (LOJN), which uses wireless technology instead.
- Garmin (GRMN) -- Garmin is the main player in the GPS device market having a market cap of 17.44B and a forward PE of 24.59.
- TomTom (TOM2.A2) -- TomTom is the European competitor of Garmin.
- Trimble Navigation (TRMB) -- Trimble Navigation is a $4 Billion company that provides GPS solutions to commercial and government users and currently has a forward PE of 23.83.
- LoJack (LOJN) -- LoJack provides services to track and recover mobile assets such as automobiles and cargo. This $450 Million dollar company has a forward PE of 17.92.
GPS Chip Makers
- Sirf Technology Holdings (SIRF) -- Sirf Techology Holdings is the dominant player in the GPS Chip market. SIRF has a market cap of $1.3 Billion and a forward PE of 18.56.
- Broadcom (BRCM) -- Broadcom is now a player in the GPS chip market because it recently bought privately held Global Locate, a maker of GPS chips, for around $146 Million.
Digital Maps
Two companies, Tele-Atlas and Navteq (NVT), were a digital map duopoly. However, Tele-Atlas, a European Digital Map Company, was recently bought out by Global Positioning Device Maker Tom-Tom (TOM2.AS) for $2.6 Billion. Tele-Atlas's main competitor, Digital Mapmaker Navteq (NVT) rose 18% on July 23 on an analyst upgrade by UBS and wide speculation by analysts and many in Wall Street that Navteq could be acquired by Garmin (GRMN), Google (GOOG) or Microsoft (MSFT). So, at the moment, there are still only two dominant companies in the Digital Map area:
- Navteq (NVT) -- Navteq is the main player, with a $5.6 Billion market cap, and a forward PE of 34.75.
- TomTom (TOM2.AS) -- TomTom, through it's acquisition of Tele-Atlas, is now a player in the Digital Map market.
GPS Integrated Products
Garmin (GRMN) and TomTom (TOM2.AS) are not the only two consumer GPS device companies. We are in the middle of the trend where cell phones, and other portable devices will have GPS integration. Players in this area could be the handset makers, such as Apple (AAPL) and Research in Motion (RIMM).
GPS Service and Application Providers
Telecom Service Providers such as Sprint (S) or AT&T (T) could benefit by offering location based services and charging for added features. Traffic.com, a Navteq company, provides real time traffic data, usually for a fee.
Companies such as Google (GOOG) also stand to benefit from Location Based services. Two years ago, Google confirmed that it wanted to try to setup free wi-fi in San Francisco. Writer Om Malik reports that says that "the initial use of location-based services might be limited to more-focused and targeted advertising." A Google official said that the bid "was in line with Google’s thinking on delivering answers anytime anywhere to anyone, and looking beyond a desktop PC."
Other Players
Previously, there was a company MapInfo (formerly MAPS) that provided Location Based Service software. However, it was bought out by Pitney Bowes (PBI) for approximately $400 Million.
On February, 2007, Trimble Navigation (TRMB) bought out Fleet Tracking company AtRoad for around $500 Million.
All these acquisitions (MapInfo, Tele-Atlas, AtRoad, Global Locate) are part of the consolidation trend in the Location Based Services sector.
Future of Location Based Services
With the great growth and potential of Location Based Services, combined with all the consolidation in the industry, I see a very bright future for many companies in this sector. The companies in this sector are heading in the right direction.
Side Note: Geo-Caching, the Scavenger Hunt Hobby using GPS
The Main Geo-Caching Site.
WallStrip Video on GRMN and Geocaching.
Wednesday, June 6, 2007
Next Generation Apple iPhone will have GPS chips
According to AppleTech TV news, the next generation of Apple iPhone may have GPS chips.
This makes sense as Location Based Services are going to increasingly integrated into anything that moves from cars, to cell phones, to cameras.
SIRF, the Leading maker of GPS Chips looks to benefit from this trend and it is very cheap here. Using information from Yahoo Finance:
Price: 22.98
Forward PE: 17.28 (yesterday, it was 16.39)
5 Year Estimated Growth: 30%
PE/G: .57
A PEG ratio of .57 (less than 1 is dirt cheap) for great growth is a bargain. GPS chips will be everywhere, and SIRF is a leader in this area. Global Locate, a private company, is a competitor, but I see SIRF remaining dominant in this area.
When you compare other companies in the location based service area by looking at their forward PE:
Garmin (GRMN): 19.98
Navteq (NVT): 27.60
SIRF looks cheap here for its growth.
Lenny Dykstra of TheStreet.com also had some good things to write about SIRF.
For the long term, SIRF looks like a buy here, but be aware of the volatility and keep your eye out for any real competitors which I do not see right now.
This makes sense as Location Based Services are going to increasingly integrated into anything that moves from cars, to cell phones, to cameras.
SIRF, the Leading maker of GPS Chips looks to benefit from this trend and it is very cheap here. Using information from Yahoo Finance:
Price: 22.98
Forward PE: 17.28 (yesterday, it was 16.39)
5 Year Estimated Growth: 30%
PE/G: .57
A PEG ratio of .57 (less than 1 is dirt cheap) for great growth is a bargain. GPS chips will be everywhere, and SIRF is a leader in this area. Global Locate, a private company, is a competitor, but I see SIRF remaining dominant in this area.
When you compare other companies in the location based service area by looking at their forward PE:
Garmin (GRMN): 19.98
Navteq (NVT): 27.60
SIRF looks cheap here for its growth.
Lenny Dykstra of TheStreet.com also had some good things to write about SIRF.
For the long term, SIRF looks like a buy here, but be aware of the volatility and keep your eye out for any real competitors which I do not see right now.
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