Trippi, the problem with answering your question is my general ignorance about II. With Trimble, you always have to look out for the unexpected management miscalculation (i.e., inventory controls) on the way up. However, it's not reasonable to average in that doubt along with a more probably result to get to $27. Either it's $17 next year -- again -- or something more like $40. This time I think it's harder for Trimble to screw it up.
Trimble's strengths are (1) its general technical and financial advantages over competitors (2) its alliances formed over the last year or two and (3) the soon to explode GPS mass markets. Its historical problem has been an average marketing and financial planning management. There are signs that it has improved, at least on its strategic planning. I think they've sacked a couple of unimpressive vice presidents.
Trimble will not be an Iomega, though. You'll see lots of embedded applications across various industries, and not one killer product taken up by everyone. Trimble has about 30% of the GPS market in total, according to what I've read (and it depends how you define the market). For example, in car navigation units that go for about $2,000, Trimble gets $125 of that revenue. Trimble has 30% market share of a factor that is itself only a fraction of the total $2,000 cost. Nonetheless, this is a very big area down the road, so to speak. Also potential blockbusters: cell phone 911 location requirements kicking in a couple of years; wireless network timing devices; avionics; mining and agriculture; surveying (where TRMB presently makes a lot of money). GPS makes many things more efficient.
There are no other pure GPS stock market plays with any real chance to do well in this field. (I.e., NovAtel and Pelorus Navigation, publicly owned, are tiny; Ashtech and Magellan, two competitors, just merged as a partially-owned private subsidiary of Orbital Sciences; Garmin, another privately owned smaller competitor is not profitable). Rockwell seems to be edged out now; Sony is not doing real well, although it has a car navigation base in Japan; Honeywell is forming GPS alliances with TRMB and other providers.
You can keep reading industry predictions of a total GPS market of $30 billion in about 2005. The best case for Trimble is a 30% share of those revenues and a high price to sales ratio. That will require some kind of GPS on a chip breakthrough, probably in conjunction with Intel. Trimble now is capitalized at about $500 million.
But you can take this for what it's worth. I don't have any inside sources, don't myself work in this field, and am not an engineer. I've just been holding stock in the company since 1991 and following it since then. |
