Garmin Needs a Deal -- Here Are Some Candidates

Sure, personal navigation devices maker Garmin(GRMN - Cramer's Take - Stockpickr) lost the $4.2 billion bid for the Dutch mapping data company TeleAtlas to its rival, TomTom.

But it's still not too late for Garmin to aggressively go after some acquisitions to put it ahead of competitors.

Garmin had hoped that a purchase of TeleAtlas could help it improve the map quality it offers to users by offering better local search capabilities, 3D mapping and points of interest such as businesses and landmarks.

Even without TeleAtlas, Garmin needs to build these capabilities and take its products to the next level. The company relies on a device that offers accurate directions to get from one point to another.

Garmin users, though, need not just driving directions but a route that is mapped for them that takes traffic conditions into account.

Garmin devices currently ask users to type the address they want to locate via a keyboard, but users will eventually want a device that responds to voice commands. And instead of a system like Garmin's that comes preloaded with information, they will want one that can connect to the Internet.

The Street.com asked nine analysts and industry executives to come up with some start-up companies that could turn things around for Garmin.

The list includes five fairly small, privately held companies that are pioneers in areas such as real-time traffic information, Internet-connected devices and speech recognition.

Garmin needs to move quickly. The company's stock has declined nearly 36% in the last two months on fears that declining prices for personal navigation devices from increased competition in the market could eat into the company's margins. Shares closed down $1.41, or 2%, to $69.99 Monday, nearly more than 44% down from its 52-week high of $125.68.

Acquiring some of these start-ups could help turn the tide for the company.

Inrix

Mapping the route from point A to point B is easy, and most navigation device makers, with some help from mapping data suppliers such as TeleAtlas and Navteq, can offer a quick, dirty version. But that may not be enough for users who want the best route based on traffic information on the ground.

Inrix offers such information, known in the trade as real-time traffic data. Much as in the mapping industry, the real-time traffic information market is largely a duopoly, with Inrix and its rival Traffic.com controlling the supply of data.

Historically, says Bryan Mistele, CEO of Inrix, traffic data have been aggregated from AM radio stations and road sensors. "But we use not just that but also GPS signals from a quarter of million vehicles around the city, including cabs, delivery vehicles and Super Shuttles to give us real-time traffic information," he says.

Inrix has an impeccable pedigree. The company was spun off from Microsoft(MSFT - Cramer's Take - Stockpickr) in 2004, after the technology giant invested nearly $15 million over six years in traffic data research. It has about 65 employees and has raised $31 million in venture funding.

It may be smart for Garmin, which is already a customer of Inrix, to snap it up before any of its competitors swoop in. Inrix competitor Traffic.com was acquired by Navteq in 2006 for $179 million. Navteq, in turn, was bought by Nokia(NOK - Cramer's Take - Stockpickr) last year for $8.1 billion.

Dash Networks

In true Silicon Valley start-up style, Dash Networks has yet to launch its first product, but the company has gathered tremendous buzz and been included on many of the industry's lists of top start-ups to watch for.