Trimble Overview . . . .
You raise some good questions, ones that everyone in this company and industry have to keep in mind. I'm looking forward to hearing from other contributors on this subject -- including you -- but in the meantime, here is my take.
It is very hard to get a handle on who has what market share in this industry, especially since many players are foreign and do not report to the SEC, and since many large companies have GPS as only a tiny fraction of their businesses. What we do have is TRMB revenue figures and industry estimates of the GPS universe, as well as predicted high growth rates for both Trimble and GPS in general.
I believe I saw a news article recently out of New Zealand that cited Trimble for the proposition that they have about 16% of the GPS market. Obviously, they used to have more, but no one (including Trimble) ever thought they could hold their early market share in the face of many new entrants increasing the overall market faster than TRMB could increase its own revenues.
Skip Paul is probably the best at analyzing by market segments. You have car navigation (Trimble says they have a 30% global share), GPS telecommunications (TRMB global share minimal at the moment, but that will increase), precision machinery such as mining and agriculture (TRMB has a significant market segment of a now very small and fast-growing area), fleet management (TRMB share is, I think, small although they are producing new products such as Cross-Check), marine, military (TRMB gets a small piece occasionally), consumer handhelds (TRMB is out of this low-margin commodity business), and surveying (TRMB has, what Skip, about 70% market share?).
Of all these GPS markets, only surveying seems to be a mature industry. and Trimble is very profitable there; it subsidizes other segments and R&D. GPS in telecommunications can be very lucrative over the next ten years, but no one is making big money yet. Same for precision machinery and probably fleet management. If the industry can get to a one-chip solution, new large consumer markets will arise.
We see TRMB breaking into the black. This time, I think they will stay there. We see GPS several market segments, such as car navigation and precision machinery control certain to become major revenue producers, and telecommunications can probably be included there as well. But major cash flow from these markets are a couple of years away. We see Trimble maintaining or expanding its presence in the various GPS fields (surveying, car navigation, precision machinery). We see continuing technical advances and lower prices, just as you would want.
We do not see GPS going away. We do not see Motorola or Rockwell or Siemens taking over the field, and we don't even know if they are making money off GPS. I rather doubt it, considering that right now Trimble relies on surveying for profits. We do not see what you think is out there -- mass market, highly profitable sales. We are still in a formative stage. Therefore, it is very nice that Trimble is self-financing and profitable and in good financial shape and in good shape regarding its intellectual property.
I invested in this company too early. But the signs are now here that GPS is taking hold. Trimble's 16% market share may drop towards ten percent, or may rise to twenty percent. But if the GPS market is going to be what it is widely predicted to be worth in a few years, Trimble will be there as a highly capitalized company -- if they are not bought out in the meantime at a nice premium. Assuming economic conditions remain good in the country, I expect consistent stock price increases, year to year, from here on out. As the company gets larger and the GPS market expands, I think the P/S ratio will also improve.
Meanwhile, this thread serves a useful purpose by filling in some blanks with news of patents, gadgets, and deals. |
