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Shorts Getting Smoked (4 Ratings) 9-Feb-07 09:19 am I love how everyone is bringing up old instances of insider selling like it is new news; if you check the SEC's website, you'll see that there was in fact insider buying prior to the call--as another reader so aptly pointed out, there's lots of reasons to sell, but only one reason to buy!
Navteq smashed the Q4 estimates on both the top and bottom line, guided in-line on the bottom line for 2007, but decimated the top-line guidance. There's been a lot of speculation about the drop in PND prices hurting Navteq's margins, but it's probably severely overdramatized. Look at the facts--when Navteq won the TomTom account from TeleAtlas, it didn't have to slash prices one iota. How can they do it? They have the best product on the market, no PND OEM trying to make his way into the space can afford to go without the best map solution.
TeleAtlas is cheaper, but can't hold a candle to it on quality. Analysts whine, "What about European coverage?" Well, Navteq just released full coverage of Europe earlier this year, and now covers 59 countries! Let's see TeleAtlas try and keep up.
Plus, auto sales (the highest-margin business for Navteq) hit rock bottom this year, any upturn in those numbers will have Navteq beating and raising every quarter from here on out.
Why all the spamming then? Short interest grew 16.7% in January, and 17.86% in December. They are upset because they are about to get their asses handed to them.
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Re: told ya so (4 Ratings) 9-Feb-07 10:46 am
You make a good point decio. After their experience earlier this year Justin and crew are smart enough to be a bit conservative on their guidance assumptions. They can afford to be conservative because there is sufficient success for them to build some wiggle room into the numbers.
As for a conservative assumption, take a look at the Euro exchange rate. For the 1.5 months so far this year the spot rate has been averaging about 1.295. The Navteq assumption is 1.27. If the spot rate were to continue to average 1.295 the rest of the year that would give an annual earnings boost of 2.7 million. That would not solve all problems but it is nice to have.
They could have predicted less 2007 revenue and been OK. Their revenue guidance didn't blow out previous estimates but the range, 720-750 was in line with the upper half of estimates.
The key to analyzing earnings estimates are how they are effected by the traffic.com purchase. And we will hear more about their thinking after that transaction is complete. I for one think that their investments in acquistions and technologies and expansions have been quite good so far. Yet I hope they continue to think carefully about what companies they do acquire.
So I conclude the results and guidance were a small positive surprise. To me this means a trading range of 36-40 would be reasonable to expect for a few months (depending on how technology stocks fare).
It's too early to know where it will land, but morning action is not typically where the smart money trades.
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