Perspectives on the Nokia NAVTEQ deal

I wanted to share some of the commentary from around the Web on Nokia’s acquisition of NAVTEQ, but first, I might as well put in my own $.02 worth…

This deal is all about location based services (LBS). Local search on your cell phone or GPS is going to show ads, just like online search does, and mobile ad revenue is going to be huge. Just like online ad revenue has driven Google’s stock to
stratospheric levels, there will be winners in the mobile ad space too. All these companies — data providers, GPS manufacturers, cellular carriers and phone manufacturers — they are all jockeying for position. The LBS marketplace is in its infancy. This is just the beginning.

Now lets hear from others. Here are some of the more interesting posts and comments from the past few days:

• ABC‘s "hunch is we’ll see way-slick Nokia-branded GPS devices on the market soon." Um, guys, better do some basic research before you post next time.
• Reuters points out that this isn’t a done deal, that Garmin may up the offer. Most analysts think the deal is too rich for Garmin’s blood though.
• One problem for TomTom and Nokia is that Tele Atlas and NAVTEQ stocks are trading well above the levels they were at when negotiations began. Tele Atlas and NAVTEQ stockholders may be hard pressed to approve these deals at this lower price per share offer. This could make Tele Atlas a more reasonably priced buyout target for Garmin.
• Google may not have any interest in these deals, preferring an open source approach instead.
• A former NAVTEQ employee weighs in on the implications for PND manufacturers and Internet companies like Google, saying the latter might "invest heavily in open source alternatives such as Open Street Map, much as they did with the Mozilla Foundation to create a viable alternative Internet browser."
• A Deutsche Bank analyst said the deal is not a big threat to Garmin, saying they could "respond to Nokia Corp.’s purchase of Navteq in several ways: it could make its own offer for Navteq, bid for Tele Atlas NV, build a mapping network of its own, or deal with Nokia…All four options are acceptable, because Garmin has contracts with Navteq through 2009 and Nokia has no reason to antagonize Navteq’s largest customer."
• Finally, a purported response from Garmin Investor Relations:

"Thanks for your e-mail. As you might guess, I have been inundated with calls and e-mails about the Nokia announcement. A couple of quick bullet points for you:

1) Since the public announcement by TomTom of their intent to acquire TeleAtlas (which was months ago), Garmin has been working hard to determine how best to protect our future opportunities.

2) There were four obvious options available to Garmin (and others who use Navteq and TeleAtlas mapping data) given that announcement – a) do nothing and wait to see what happens, b) pursue a strategy to build our own mapping data, c) make a counter-offer for TeleAtlas, and d) work to acquire Navteq.

3) As we have multi-year contracts for mapping data with Navteq, there isn’t really any near term risk for getting the mapping data we need to build our products. We have something of a ‘window’ of time to consider what is best for Garmin; an immediate response is unnecessary and would not allow us to thoroughly consider our direction.

4) Nokia’s announcement of their intent to acquire Navteq does not change these options.

Garmin management continues to carefully evaluate the various ways all of these different options might play out, and the risks and benefits associated with each – and there are both risks AND benefits to ANY path we may choose. We have not yet determined the best course of action for Garmin, but when we are comfortable with our direction, we will communicate this to the public. Until that time, it is our policy to avoid any public comment, and to my knowledge we have no intent at this point to issue a press release."