Good speculation on holding the GPS & mapmakers theme. I'm not sure if you saw the Forbes story related to the Navteq bid. I've been sitting on the sidelines with liquid holdings from my recent long term acquisition success. I've been in no hurry to put the funds back in. One related technology theme I see needed in the future is the batteries to power the devices as well as laptops. They need to last longer. Local Ultra Life ULBI Batteries is getting military contracts. GRACE BROTHERS LTD has been a beneficial owner for some time. I don't own any, but wonder if they can competitively apply applications to phones and laptops.
Nokia On TomTom's Trail With Navteq Buy
Lionel Laurent, 10.01.07, 7:51 PM ET
LONDON -
Finnish handset maker Nokia announced its biggest acquisition yet on Monday, an $8.1 billion purchase of U.S. digital mapmaker Navteq, in what looks like a defensive play following TomTom's acquisition of Tele Atlas in July.
Nokia (nyse: NOK - news - people ) is paying a rich $78 per Navteq (nyse: NVT - news - people ) share to bolster its navigation services, which already use Navteq data, and to prevent the digital mapmaker from falling into the hands of companies like Google (nasdaq: GOOG - news - people ) that might be looking to acquire a slice of the fast-growing navigation market.
Global positioning devices company TomTom (other-otc: TMOAF - news - people ) bought Navteq's main rival Tele Atlas (other-otc: TLATF - news - people ) in July for $2.8 billion, in part to fend off competition from Nokia in the mobile navigation market. That left Navteq as the only truly independent major player, and it looks as though Nokia was willing to pay a hefty price to avoid losing it to another technology company.
"Nokia was dual-sourcing from Tele Atlas and from Navteq," said Martin Garner, analyst with Ovum Research. "So it would have been a jolt when Tele Atlas was bought."
Nokia shares dropped 49 euro cents (70 cents), or 1.8%, to 26.17 euros ($37.26) in Helsinki, as investors balked at the asking price. Navteq plummeted 1.5%, or $1.52, to close at $76.45 in New York, a slight fall considering the stock's incredible gain of 118.6% since January.
"The price tag for the company is quite expensively valued," said Michael Schroder, an analyst for Kaupthing Bank in Helsinki. "Then again, I’m not sure if that kind of business should be that cheap."
Schroder said that the navigation market was growing rapidly--boosted by mobile phones able to handle the technology--and that buying Navteq would make sense given Nokia's use of the mapmaker for its navigation services. It would also be beneficial for the Finnish firm's new online portal, Ovi, which allows users to download maps, music and video games directly to their phones. (See "Nokia's Online Play")
"If Ovi is successful then this acquisition could contribute a lot of value to Nokia, but we struggle to believe that it will earn its keep in the short term," said Richard Windsor, an analyst with Nomura International.
Windsor said that in addition to the hefty price tag, Nokia would have difficulties realizing immediate returns from the deal as competitors such as Google and Apple (nasdaq: AAPL - news - people ) are offering turn-by-turn direction services for free.
Navteq reported a 49.0% increase in sales in its second quarter to $202.3 million from the same quarter a year ago, as well as a 71.8% gain in net income to $40.9 million.
Nokia has a market capitalization of 107.6 billion euros ($153.1 billion), nearly 20 times that of Navteq.
forbes.com |
