Garmin vs Nokia

I have shares of Garmin (GRMN) in my IRA account. It's been a fantastic investment for me. And it's a great company. They have absolutely no debt. Zero. They have great products. I have an eTrex model that I bought several years ago. I actually took it with me when I was deployed to Iraq. I ended up using it more than the Rockwell GPS systems the Army has.

Anyway, my last purchase was around $56 and it's trading around 107 now. Unfortunately it was trading as high as 122 on Friday. Yesterday Nokia (NOK) announced it was purchasing Navteq (NVT). Navteq happens to supply Garmin with it's maps for their GPS systems. In fact, Garmin is their largest customer. Nokia is paying $8B for them. Assuming this acquisition goes through, Nokia will become the most important customer. This means Garmin will have less influence on features as well as reduced negotiating power for pricing. I'm not sure why Garmin did not put in a bid themselves. TomTom, a direct competitor to Garmin, recently purchased Tele Atlas who was a competitor of Navteq. So now, Garmin is stuck with getting its mapping data from either Nokia or TomTom - that's generally not a good thing when you have to get data from direct competitors.

My plan right now is to give a little bit of time for things to shake out. I have plenty of profit from GRMN, so I can afford to do that. Maybe Garmin will make a counter offer, although I think they should have made an offer before Nokia did. Or maybe there is some other plan that they haven't announced yet. I still like the company, but this news threatens their long term prospects a bit.