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Oct 3, 2007

Nokia + NAVTEQ = Trouble for Garmin?

Analysts digesting the recently announced purchase of mapmaker NAVTEQ by Nokia see trouble ahead for Garmin. Forbes argues that as the world's largest maker of navigation devices, Garmin enjoys quite a bit of influence over Navteq’s product development; influence it is not likely to enjoy over a behemoth like Nokia. Forbes also wonders if a rise in map prices is in the future.

Analyst Richard Valera says Garmin's influence over NAVTEQ is overratted. However he suggests says of the combined Nokia-NAVTEQ operation, “They could be formidable competitor with Garmin in a space that is clearly Garmin’s main growth area.”

Garmin's stock price fell more than 10% on the announcement of the deal. There was wide speculation that Garmin would buy NAVTEQ itself, since the firm is its main map supplier. That speculation has not totally gone away. Reuters reports that NAVTEQ's call options, allowing investors to buy its shares at $80 by mid-January, were active on Monday. One analyst told Reuters that investors were not ruling out a rival offer by Garmin.