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By TMFCanuck
October 31, 2007

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Wow,

Great earnings, raised guidance, yawn....

But on the acquisition front, my wife commented, when she heard the news this morning that, "Well, they've just stuck in the knife". The question, of course, is into whom?

1) TeleAtlas is ostensibly in no Garmin products - they use Navteq maps. How difficult will it be to rework GRMN products to run off TeleAtlas mapping? And recall that TeleAtlas is nowhere near as profitable as Navteq. Has GRMN perhaps stuck themselves? Then again, I'm not a fan of the crew running Navteq...so are the TeleAtlas folks a better fit for GRMN (presuming that the Navteq management would have stuck around regardless).

2) Speaking of Navteq, GRMN represents over 10% of their revenue; anecdotally, I've heard numbers of 17-19%. I presume GRMN would seek to exit their Navteq contracts and use TeleAtlas exclusively. So...if you're Nokia, are you willing to pay as much for Navteq now that there's an imminent departure of your largest customer? Both Navteq and Nokia are probably sporting some flesh wounds.

3) You've essentially just forced TomTom to trump your bid - perhaps 30%-40% over their initial bid, or lose their predominant map supplier to their largest/only competition. Though I'm sure GRMN wouldn't mind licensing their maps to TomTom for a moderate fee... Even if GRMN has no intention of ultimately acquiring TeleAtlas, they can run up the bid (I do this all the time on eBay auctions...yeah, I'm a jerk).

I think it's a tremendously bold move, with perhaps implications to both hurt, or greatly strengthen GRMN. But it also shows that GRMN is more interested in controlling their own mapping data than they previously have admitted to. Hopefully, this doesn't come back to bite them if they are ultimately unsuccessful in acquiring either Navteq or TeleAtlas.

Interesting times....


Jim