Stock Values Tumble - Mid-Year Earnings Review of Public Geospatial Companies

By Joe Francica

The first half of 2006 has not been kind to public geospatial companies. Nearly every company experienced declines in stock value. Noted exceptions to this were Garmin and Trimble; each seeing double digit growth in value. Refer to graph below:

ADSK - Autodesk - Autodesk’s quarterly information is not available until August 17th. Most analysts still have a BUY rating on the stock but the current price is well off its 52-week high of $48.27. Autodesk closed Monday at $34.11. Bill Snyder of cited a survey conducted by Citigroup of Autodesk resellers that indicated solid demand for products. Publishing that survey gave the stock a 6% boost. First quarter results cited record earnings of $436 million but Wall Street was not impressed as the stock continued to fall. After a few years of remarkable returns for investors, the stock is taking a breather and investors are possibly on the sidelines until Carl Bass has more time at the helm under his belt. He took the role of president and CEO on May 1, 2006 when Carol Bartz retired.

ANTL - Analytical Surveys - The company received a letter this week from NASDAQ stock market officials warning that its common stock was not in compliance with the market’s listing rules. The company must maintain a share price above $1.00 and closed on Monday at $0.54. The stock is well off its 52-week high of $3.54. The letter does not immediately affect the stock’s listing but the situation could lead to de-listing the stock in the future. CEO Lori Jones is quoted in a press release as saying, "The transition of our business model obviously involves challenges in the short term, but we believe we have made investments that will prove favorable to the company and our shareholders during fiscal 2007. We are in the final stages of completing most of our GIS contracts, and plan to sharpen our focus on the energy sector going forward."

ARDI - @Road - Wall Street expected a penny profit this quarter but @Road continued to lose money. In addition, the company filed to restate earning, normally a red flag. Investors had already hit the stock hard in July sending the stock down more than $1.50 or 26%. The company was just recently awarded two patents, the first for a system and method for Dynamic server managed profiles for mobile users and the second for playing of audio via voice calls initiated from visual navigation.

GRMN - Garmin Ltd. - Garmin had been the darling of Wall Street all spring (up over 50% since January) until it hit a bump in the road from analysts who think that the company is facing stiff competition, especially from better know retail manufacturers like Sony. The company still intends to launch 66 new products this year and open a 15,000 square foot store in Chicago. Several Wall Street analysts have downgraded the stock including Am Tech/JSA Research which issued a rarely used SELL advisory sending the stock down over 6% on August 1st alone.

INGR - Intergraph - Intergraph reported increases in its second quarter net income over the same period in 2005 by approximately $9.3 million. In addition, the company announced plans to continue is share buyback initiative and increase the share repurchase program from $21 million to $100 million. Since 2001, Intergraph has spent $714 million dollars acquiring 25 million outstanding shares. In an interview last year, CEO Halsey Wise indicated that this was his strategy for increasing shareholder value. He stated, "The reason why you buy back your own shares is that you think that's an important and high use of capital. You buy back your stock, not because it's a signal that you don't have anything else to do with it, but that you can buy your stock cheaper today than what it's really worth...A stock buy back is a bullish signal that the future will be better than today." Intergraph has lost 30% of its share value since the beginning of the year, however the company has rebounded above its 52-week low set in late June.

MAPS - MapInfo - MapInfo’s Q3 income rose 11% over the same period in 2005 to $43 million. The company is expecting total revenue for the year to be between $165 - $167 million, up approximately 11% over last year's revenues. Wall Street has been pounding tech stocks in general and MapInfo is certainly affected by this. CEO Mark Cattini remains upbeat about the company’s future citing the growth among its enterprise clientele. That may in fact be the problem in the coming months. As the economy cools and IT expenditures slow, MapInfo may feel the pinch.

NVT - NAVTEQ - NAVTEQ’s stock plummeted on news of weak second quarter earnings related to sales in the automotive sector. "With (the in-car navigation) segment still accounting for 70 percent of revenue and demonstrating material weakness, we believe significant headwinds lie ahead for the company," Deutsche Bank analyst Jeetil Patel said in an Associated Press report. He lowered his investment ratings on the stock to "sell" from "hold." The company has lost 32% of its value since the beginning of the year.

SIRF - SiRF Technology - GPS chipset manufacturer SiRF may be viewed as a bellwether stock to predict overall growth in the navigation market. If so, then things are not looking so good. The stock has been rocked over the past six weeks, losing 41% of its value. It is down 52% from the most recent high of $40.91 on March 1st. Motley Fool advisor Dan Bloom thinks the company is extending overly favorable terms to customers and SiRF issued a gloomy outlook for its third quarter. But according to an Associated Press report, Adam Benjamin a financial analyst from Jefferies and Company cut his price target yet issued a BUY rating on the stock citing increasing adoption rates for GPS equipment.

TRMB - Trimble - Trimble reported second quarter growth of 20% and the stock zoomed almost 11% on the news. Defying the trend among GPS equipment suppliers, the company is expecting third quarter growth to be between 17% and 19%. Trimble CEO Steven W. Berglund said, "Our strategic initiatives in the construction and mobile work place are beginning to contribute to Trimble's revenue and provide the foundation for continued growth." Trimble’s Mobile Solution group posted revenues up 133%; Field Solutions was up 13%; and Engineering and Construction was up 19%.

TATL.DE - Tele Atlas - Traded on the Geregelter Market of the Frankfurt Stock Exchange, Tele Atlas also skidded in value tumbling 46% since the beginning of the year. Most likely affected by the same market conditions as NAVTEQ, cited earlier, an immediate rebound for either stock is unlikely. However, the end of the year could see a pick up in the retail sector and both companies are tightly connected to GPS and navigation systems manufacturers.

Published Friday, August 4th, 2006

Written by Joe Francica

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