Garmin (Nasdaq: GRMN) designs and manufactures GPS devices and other navigation devices worldwide. It is headquartered in Camana Bay, Cayman Islands, with offices in Olathe, Kan., and was founded in 1990.
GPS devices use the satellites operated by the U.S. Dept. of Defense involved in the Global Positioning System. By receiving signals from several satellites at once and knowing the direction those signals are coming from and the locations of those satellites, the GPS device can determine where on the surface of the planet it currently is sitting. That information can be integrated with a map to allow the user of the device to get directions to any location contained within the map's memory. Garmin sells devices that do this.
It operates in three principle segments: Automobile/Mobile, Marine/Aviation, and Outdoor & Fitness. The majority of its revenue comes from the first segment, but the other two continue to grow.
The Automobile/Mobile segment sells GPS devices to be installed in cars (where they are a popular "extra" and could become a standard feature) as well as mobile devices which can be mounted on the dashboard of a car or carried with the user.
The Marine/Aviation segment sells devices used in boats and planes, including commercial jetliners. The Outdoor & Fitness devices are used by campers, hikers, walkers, joggers, and contain several features special to those customers.
With the release of the "smartphone," competition for Garmin's hand held devices heated up. With GPS-like capability in cell phones (usually through determining location through signals received from several cell towers), concern arose that Garmin would be made irrelevant. Partially in response to this, Garmin decided to launch the nuviphone in 2008, but later pushed back the release date to some time in the first half of 2009. This product seems to be viewed as a "make or break" product for the company, despite the fact that the company's revenue is still dominated by the Automobile/Mobile segment (which continued to grow in late 2008).
There are currently only two map data providers for GPS-makers: Navteq and TeleAtlas. Garmin's map data comes from Navteq which was acquired by Nokia in early 2008. The other map data provider is TeleAtlas, which Garmin tried to purchase, but lost out to Tom Tom, a direct competitor of Garmin. Some analysts believe that Garmin's bid for TeleAtlas wasn't for the purpose of buying that provider so much as it was to raise the price and force TomTom to overpay for the company. Garmin has secured a long-term contract to receive map data from Navteq.
Many analysts see GPS technology becoming somewhat commodity-like in the near future with GPS and feel that Garmin's day has passed. Such concerns helped drive the share price down during 2008. Their concern seems to lie with if GPS comes with your car and cell phone, why would someone feel compelled to go out and buy a separate handheld device?
While past and current successes for Garmin have been impressive, the future is uncertain.
Recent Mentions on Fool.com
- Why Garmin Ltd., Kraft Foods Group, Inc., and Coach, Inc. Are Today?s 3 Worst Stocks
- Why Garmin and Micron Technology Shares are Dropping as Glu Mobile Rallies
- GoPro Stock Plunges for the First Time: Here's What Really Matters
- Did Garmin Crash With Its Newest App?
- Wednesday's Top Upgrades (and Downgrades)