Foolish Forecast: Navteq Coming Home
By Dave Mock
October 30, 2007
In what may be its last report as an independent company, digital map czar Navteq (NYSE: NVT) will report third-quarter earnings results Wednesday. To help get a read on where the company is going, let's backtrack a little.
What analysts say:
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Buy, sell, or waffle? With the company due to be acquired by Nokia (NYSE: NOK), only 17 analysts still post ratings on Navteq. Five still have a buy on shares, while 12 say hold.
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Revenues. On average, analysts estimate a 36% jump in sales, to $194 million.
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Earnings. Profits are predicted to rise 4% to $0.29 per share.
What management says:
With the Nokia purchase pending, numerous concerns have been voiced about the ongoing availability of maps to Navteq customers, such as potential Nokia competitor and GPS maker Garmin (Nasdaq: GRMN). But Nokia and Navteq management have reassured the market that they intend to continue support for all Navteq customers, such as a recent deal to be the primary supplier of location data for wireless service provider Helio, a partnership between Earthlink (Nasdaq: ELNK) and SK Telecom (NYSE: SKM). Navteq CEO Judson Green has stated that Navteq will remain an independent operating company under Nokia, with the ability to serve all customers.
What management does:
Several nonrecurring items including a stronger euro helped boost Navteq's margins earlier this year, but management has cautioned that the balance of the year might not see similar benefits.
|
Margin
|
4/06
|
7/06
|
10/06
|
12/06
|
4/07
|
7/07
|
|
Gross
|
51.7%
|
51.3%
|
51.5%
|
52.6%
|
53.7%
|
54%
|
|
Operating
|
25.3%
|
23.9%
|
24.2%
|
26.4%
|
27.7%
|
28%
|
|
Net
|
33.1%
|
32%
|
17.3%
|
18.9%
|
20%
|
20.6%
|
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
With Nokia's purchase of Navteq expected to go through, there may not be much more of a public story to follow with the company. But with many investors and analysts believing Nokia's $8.1 billion offer was way too much for Navteq, it may be interesting to check back in a year or so and see if the pairing has gone well, or more the way of eBay's (Nasdaq: EBAY) deceptively non-cash $1.4 billion dollar write-off for Skype. Either way, the investing public will be missing out on a great growth story in the digital mapping space.
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