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By aitraders
July 31, 2008

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Hi Vic

I am glad you asked. I will do my best to put out a PRO argument:
I recently posted this on the TMF SA board:

Actually, if you read the report, the total take from the Teleatlas deal was $72m ytd they made off the deal overall.

Lets see, they avoid overpaying for a map business that was losing money and 2nd place in the market, sign a 10 year deal with the exclusive money making Nr. 1, force their nr. 1 competitor to take on huge debt which ensures there wont be a price war (anyone notice in this quarter how they said margins have stabilized? anything to do with TomTom behaving themselves in pricing?) and their ability to invest in R&D will be severely curtailed, and walk away from the deal with $72 million?

Why does Wall St. hate these guys?

a couple of other points that bewilder me about the potential here:

The outdoor (54%) and aviation (15%) units now make up 23% of revenue and are growing at or show the potential to grow at the largest %'s and best margins. ($209m ytd of $912m ytd revenue = 23%)

That is in the quarter where they just got FAA approval for a huge cockpit G1000 in addition to already approved products. Where they see the handheld market decreasing, they have improved the product line with retro-fit fixed installation products - that according to one comment is 'revolutionary' - check out the picture of this thing:
https://buy.garmin.com/shop/shop.do?cID=153&pID=97... click on picture - it looks like a game console from a PC flight simulator.

See also link: http://biz.yahoo.com/prnews/080728/aqm069.html?.v=48

And the Tour de France team was not only savvy marketing in Europe where at the moment they only have 20% of the market - high end cyclists spend a lot of money on their gear and the future cross-over business could be really important. The Garmin Cycling Team will be in the press the entire cycling season and next year as well - the benefit goes definitely beyond cycling. And of course, the team was using the NEW Edge 705 - which sells for $500.

https://buy.garmin.com/shop/shop.do?cID=160&pID=10...

You gotta know that product is going to have a great future and the tour riders will give them all the feedback they need to stay on top. Christmas in Europe looks good.

That is simply outstanding future growth areas - and new areas where they will simply dominate and there won't be any iPhone competition or TomTom for that matter. Commodity? I am not sure I understand the term as Cramer used it.

Next,

Asia revenue was $71 million and up 34%.
USA rev. = $576m (300m people)
EU rev. = $307m (350m people)

$71 million (1.5 billion people)? get outta here. We are talking ASIA, not just China.

Did y'all see the last post with the articles about growth in China cars and the NOT coincidental announcement of Garmin maps for China just before the Olympics?

http://biz.yahoo.com/prnews/080728/aqm511.html?.v=14

http://www.fool.com/investing/international/2008/07/26/a-value-investors-dream.aspx

And the factory in Taiwan will deliver all of these products next door - no TomTom Europe to Asia imports with tariffs, shipping charges etc.

Why do these people even talk about the iPhone anymore?

And did anyone notice there is not one mention of Russia or South America? not 1 lousy $ of sales?

Revenue ytd was at $1.58 billion. Garmin and analysts agree that the year should be at least $3.9 billion. Conclusion - we should see $2.3 billion in the 2nd half.

If this company doesn't do $10 billion in 3-5, then the world is coming to an end.

And at the rate they are going, they will do $10 billion and only have about 200 million shares still outstanding. at, say, net income 25% of revenue ($256m on $912m rev), they will be making 2.5billion = $12,50 / share. okay, getting a little carried away here, I am sure - maybe.

What do you all think they are going to do with all that cash?

Auto, marine, outdoor, aviation - good margin management, excellent free cash flow, dominant market share and growing, technically innovative with their pulse on the advances and sectors and OEM contacts necessary for growth, 41% insider ownership, 40% ROE, PE is now at 10, PEG under 1,

I keep looking for the ACNE on this beautiful girl, but I still don't see it.

aitraders
long GRMN

P.S. Oh, and by the way,

According  to their release, they reduced their inventory by $141m, or by 20% QonQ, at the same time as revenues went UP 20%. Inventory should now be at ca. 676m - 141m = 535m or 6% above Q4 2007.