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Technology Stocks : Trimble Navigation -- Ignore unavailable to you. Want to Upgrade?

To: arun gera who wrote (2183)	2/3/1998 6:36:00 PM
From: Petz	Respond to of 3506

First Block 2R GPS satellite (SVN 43) was set "healthy" on 1/31/98. This is the first of a series of up to 30 new GPS satellites to replace the aging Block 2 and Block 2A satellites over the next five years. Performance of the new bird is setting records -- less than one meter "ERD." By the way, for those who want to learn more about how GPS works, call Trimble and ask for the free booklets -- GPS, the Next Utility and Differential GPS Explained. Petz

To: arun gera who wrote (2183)	2/3/1998 7:38:00 PM
From: Yin Shih	Read Replies (2) \| Respond to of 3506

<<I simply don't understand which way Trimble is going with its Trimline electronics.>> This appears to me to be a "throw-away" announcement. Certifying an AM/FM/CD unit to be non-interfering with other avionics and suitable for general aviation planes is not a major innovation nor likely to lead to much additional revenues in itself. I think it primarily shows that Trimble is continuing to pursue a strategy of being more than a GPS provider in the general aviation avionics world. Terra by Trimble, TrimLine, and TrimConnect provide a one stop shop for avionics. The major missing items are: autopilot and radar. This strategy (as distinct from the commercial airline GPS business in which Trimble is in partnership with Honeywell) basically puts Trimble in competition with Allied Signal (King brand avionics) for the GA avionics business. Allied Signal has a very complete product line and there are system integration benefits to that which lead a plane manufacturer to specify a single vendor panel. With IFR avionics, such a panel can be worth $20-30K. With high-end IFR avionics and autopilot, a panel can be worth $50-100K. Thus being selected as the OEM supplier for a model can be worth a lot of business. Unfortunately, the new general aviation (GA) plane market is very small right now. At its peak, in the mid-70's, Piper/Cessna/Beech/Mooney may have delivered as many as 10,000 planes a year. Today, that combination probably delivers about 500-700 GA planes a year, mostly high end costing from $250K to $700K per plane. I think the total GA fleet in the US numbers in the range of 100 to 150 thousand planes. Most of these planes are 20 years old or older due to the drastic reduction in production rate over the last 20 years. Because these planes are aging, one scenario says that the production rate should start rising to compensate for age and attrition. This is the reason that we are seeing new plane manufacturers entering the market, like Cirrus, and old plane manufacturers re-entering, like Cessna. But for that to be a realistic scenario, airplane manufacturers also need to figure out how to deliver 2, 4 and 6 seaters at a much lower cost than the current price range. The Terra by Trimble line fits into that scenario nicely, as the IFR avionics panel Terra offers is less expensive than the comparable King panel. A selection by a plane manufacturer, for example Cirrus, as the OEM supplier of the factory IFR avionics panel could be worth 300 planes x $10-15K or $3-4.5M of business. I think the TrimLine and TrimConnect trademarks may be a useful distinction as King and Terra are an either/or proposition in the basic GA avionics panel and Terra does have a "budget" connotation today. So keeping TrimLine and TrimConnect products separate can ease the ability to complement King avionics in small GA planes or King/Collins avionics in corporate GA. Here's another factor, the FAA has declared that NDB's and VOR's will cease to be a supported means of navigation starting in the first decade of 2000 with GPS being the replacement. What this policy does is obsolete a large fraction of the King designs and installed base, shifting the focus to GPS which is Trimble's strength, giving a plane manufacturer less reason to go with King and more with Trimble. So these distinctions and product directions do make some sense. Whether they succeed is a longer term question. Still, even if the GA plane market does increase dramatically, it would be a nice piece of change, but it won't be the reason that TRMB goes to $100/share. So I think it is mostly a sidebar to the main story. Yin