This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Garmin's Worries Aren't Over

SAN FRANCISCO -- Relieved investors may be cheering navigation devices maker Garmin's (GRMN) decision to drop out of a bruising bidding war with rival TomTom over Dutch mapping supplier Tele Atlas.

But questions about the company's long-term strategy remain.

Garmin decided Friday not to top TomTom's offer of $43.99 a share, or $4.2 billion, for Tele Atlas, and will instead extend its deal with Tele Atlas rival Navteq (NVT) through 2015 with an option to renew it for another four years. Cell-phone maker Nokia (NOK - Get Report) announced last month it would acquire Navteq for $8.1 billion.

Garmin's attempt to stick to its current course sent the stock soaring more than 16% to $97.76 Friday; the stock was up another 50 cents in early trading Monday.

However, the company's latest move does not answer larger concerns about how it plans to hedge the risk it's taking now that it is dependent on a competitor for mapping data and where it will get the capability for real-time traffic information or better Internet-enabled local search capability -- features that Garmin cited as reasons for its Tele Atlas bid.

Not having Tele Atlas also could put Garmin in the position of having to build its own maps database and tools -- a process that it has conceded is expensive and risky.

To its credit, Garmin has walked away from a potentially crushing standoff. The company's decision to withdraw has saved it big bucks and forced TomTom to pay $1.5 billion more than it had planned. It has also allowed investors to focus on Garmin's strong fundamentals and growth, without the distraction of a difficult merger hanging over the company.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
NOK $7.76 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%


DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs