Debt-Free Garmin Could Buy TomTom Cash; But Should Sale Nüvifone To Asus

February 24, 2009
Garmin should leave the smartphone market before it's too late. It's upcoming M20 GPS phone will be made by Asus

Garmin should leave the smartphone market before it's too late. It's upcoming M20 GPS phone will be made by Asus

Unlike rival TomTom, Garmin‘s finance is healthy and sound despite the faltering economy.

The debt-free U.S.-based GPS maker could even buy the Dutch company… cash!

TomTom is currently valued at approximately $543 million. And that’s even after last year’s $3.7 billion acquisition of map maker Tele Atlas!

On the other hand, Garmin boasts $697 million in cash at the end of last quarter.

Yesterday the Kansas-based company posted total revenue of $3.49 billion for 2008 – up 10% from $3.18 billion in 2007 – and profits of $732 million. Last year, Garmin sold 16.9 million units, an increase of 38% from 2007, versus 12 millions for TomTom.

Garmin should get rid of its GPS smartphone

Despite heavy competition, the GPS maker still plans to launch its line of GPS smartphone dubbed “Nüvifone” during the first half of 2009.

The G60 model will be co-branded Garmin‐Asus following an alliance with the Taiwanese company known for its EeePC netbooks.

Garmin will also release the M20, a Windows Mobile‐based smartphone with some unique LBS (location-based services) applications and functionality.

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Posted by TechPulse 360

Near Bankrupt Spansion Cuts 3,000 Jobs, 35% Of Workforce; Defaults On ChipMOS Debt Payment

February 24, 2009

Is Spansion getting ready for a fire sale?

The troubled flash memory maker is cutting approximately 3,000 jobs, or 35 per cent of its workforce amid a sinking market.

Most of the cuts will come at the company’s manufacturing sites.

The company expects that when complete, this reduction in force will result in approximately $25 million in cash charges, during the first half of 2009, and  provide approximately $225 million in annual cash cost savings.

Spansion defaulted on ChipMOS debt

In a related news, ChipMOS said it ended its services contract with Spansion – which started in December 2005 – after it defaulted on a $29 million debt. Spansion currently has an account receivable with ChipMOS of approximately US$73 million.

The Taiwanese chip testing and packaging maker will provide future services to Spansion but with payment terms of cash on delivery.

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Netbooks To Exacerbate PC Sales 24% Drop In 2009, Morgan Stanley Says

February 24, 2009
Netbooks low price is accelerating the PC market collapse

Netbooks bargain pricing is aggravating PC market woes

No recovery in sight for the PC industry.

Earlier this month, J.P. Morgan said it expects PC sales to decline 13.5 per cent in 2009.

Rival Morgan Stanley, now thinks the revenue drop will be closer to 24 per cent in revenues, 11 per cent in unit sold and 15 per cent in average selling prices (ASP). For 2010, the revenue decline will slow down to 3 per cent despite a 2% in units.

I’m sure some some obscure analyst firms will be quick to publish an even dire prediction!

Earlier Morgan Stanley analysis predicted “only” a 10 per cent drop. The investment bank analysts explained the revised outlook on the rise of the netbooks; sometimes more than 50% cheaper than a standard notebook.

The bank’s analysts see netbooks cannibalizing 10% of the traditional notebook market, reaching 20% of the entire notebook market in 2009, versus 9% last year. Netbook units could reach 22 million this year and 31 million net year, up from 10 million in 2008.

As a consequence, the bankers reduced their 2009 earning estimate for H-P and Dell.

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Is GPS Maker TomTom Heading To Bankruptcy?

February 24, 2009
TomTom is now on the brink of bankruptcy because it overpaid for Tele Atlas

TomTom is now on the brink of bankruptcy amid heavy borrowing to pay for the Tele Atlas acquisition

Amid a heavy debt load and the global credit crunch, GPS maker TomTom might end up bankrupt.

Today, the Dutch company reported its 2008 financial results posting a $183 million profit on revenues of $2.2 billion.

For the year ending in December, TomTom booked a $1.3 billion impairment charge for Tele Atlas, the digital-map maker it over-paid last year for $3.7 billion.

With a total debt load of $1.4 billion and sales expected to decline in 2009 according to analysts, TomTom might not be able to afford to repay its debt and apply for bankruptcy protection.

“Based upon the group’s plans for 2009, management expects to comply with the loan covenants. However, given the uncertainties in the wider macro-economic environment and their knock-on effect on consumer spending, scenarios can be envisaged where the loan covenants could be breached,” said TomTom Chief Executive Harold Goddijn in a statement.

TomTom expects flat sales in 2009

Looking ahead, the GPS maker – which leads in Europe but lags behind rival Garmin in the U.S. – now expects to sale between 11 and 12 million units in Europe and North America, with revenue for the full year 2009 of between $1.79 billion and $2.04 billion.

An overly optimistic outlook despite the sudden drop of consumer spending. In 2008, TomTom sold 12 million units. Meaning that the Dutch company expects in 2009 to keep revenues and units sold constant with the prior year!

The markets for personal navigation devices (PNDs) – including the GPS devices for cars – in Europe and North America are around 15 million and 17 million units in size respectively.

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Report Says Verizon Is Preparing To Carry The IPhone

February 23, 2009

AT&T’s exclusive deal for the iPhone in the U.S. could be coming to a close.

The Web posting is not the first to speculate about a Verizon-friendly iPhone

The Web posting is not the first to speculate about a Verizon-friendly iPhone

Verizon Wireless will soon announce a deal to distribute Apple’s iPhone in America, according to the ITExaminer.com Web site.

Apple has been seeking EVDO and CDMA engineers for months, suggesting it could be developing a version of the phone for the Verizon networks, the Web sites says.

The speculation isn’t the first to claim a Verizon-friendly version of the iPhone is on the way. Last September, Engadget said it too had received wind of such as device.

Verizon has said it has two dozen new devices scheduled for launch in the first half of the year.

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Posted by Mark Boslet

Americans Watch More Video On Mobile Devices Than Computers

February 23, 2009

Television viewing continues to set records in the U.S. with the average American watching an astonishing 151 hours of monthly programming – almost 5 hours a day.

Consumption of video on the Internet and on mobile devices is on the rise as well, with average monthly viewing reaching 2 hours and 53 minutes and 3 hours and 42 minutes, respectively, in the fourth quarter.

Time-shift viewing, where programs are recorded on a digital video recorder, also increased to 7 hours and 11 minutes, according to a new Nielsen study.

The study underscores the notion that while video consumption on the Internet and mobile devices is increasing, it so far hasn’t detracted from traditional viewing on the home’s big screen.

However, it does show a generational shift. Video viewing on the Internet is strongest among people 18 to 34 and on mobile devices children between 12 and 17 are by far the biggest users.

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Posted by Mark Boslet

Chip Market Will Not Recover Fully Until 2012, Analyst Says

February 23, 2009

The semiconductor market has a long road to ahead.

Manufacturing capacity will fall during the downturn

Manufacturing capacity will fall during the downturn

So says In-Stat analyst Jim McGregor, who on Monday projected it will be 2012 before the industry returns to 2007 sales levels.

McGregor’s report offers a mix of good and bad news. On the negative front, sales for the chip business should fall almost 20 percent this year, a deeper decline than the 5.6 percent the generally more upbeat Semiconductor Industry Association predicted in November.

However, he notes the recovery is expected to start in the second half of the year and continue into 201, when growth will be 11.8 percent.

Despite the modest rebound, the decline will be steep enough and long enough to reduce the amount of available manufacturing capacity through mergers, restructurings and failings – an unusual turn of events.

Manufacturing capacity peaked at 90 percent utilization in early 2008.

Revenue from DSPs, or digital signal processors, declined by 14.9 percent last year to its lowest level since 2003, said In-Stat.

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Posted by Mark Boslet

Live Video Streaming Of Allman Brothers Concerts At A Price

February 23, 2009

Wyndstrom said Monday it launched the live music site Moogis in time to Web stream the Allman Brothers’ 40th anniversary tour next month.

Site to stream the 40th anniversary tour next month

Site to stream the 40th anniversary tour next month

The catch: site charges $125 to become a six-month subscriber.

The site underscores the challenge facing social-net entrepreneurs. Find the right content and the hordes will come. But will they pay?

Moogis says it will broadcast live over the Web the 15-date Allman Brothers tour at the Beacon Theatre in New York City. It also promises shows from other “jam bands,” including The Grateful Dead, Phish and the Dave Mathews Band – in addition to social networking features enabling members to set up profiles, etc.

So, the question is will people pay $125 for the privilege?

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Posted by Mark Boslet

Down Rounds Returning To Venture Business

February 23, 2009

In the aftermath of the dot-com collapse, with the venture business in turmoil, technology startups stomached down round financings in desperate attempts to survive.

This year could bring a rebirth of the do-or-die funding environment.

The only thing companies can do, unfortunately, is drop their price, says Robert Ackerman

The only thing companies can do, unfortunately, is drop their price, says Robert Ackerman

Already venture capitalists say they are seeing young companies raise money at lower valuations than they had in the past. Many more deals are expected.

“I think there will be a lot of down-round activity this year,” said Robert Ackerman, managing director and co-founder of Allegis Capital.

With venture investing plunging 39 percent in the fourth quarter and likely to remain weak, “the only thing companies can do, unfortunately, is drop their price,” he said.

The tough deal-making environment arrived more rapidly this time than in 2001 and 2002, when it took the venture business about five quarters to reach a bottom.

“This time (the business) went right off the cliff,” says Ackerman. “It was more jarring.”

For venture capitalists, such as Ackerman, the suddenly deflationary market place isn’t all bad news. With company values down, it is the same as finding “innovation on sale,” he says.

Allegis has already agreed to finance two early-stage startups with deals that are expected to close within the next two weeks.

One company is in the computer-security business and the other is a consumer Internet venture. Both are down rounds.

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Posted by Mark Boslet

Displaybank Forecasts Flat Panel Price Increase

February 23, 2009
Flat panels lost half of their value in one year

Flat panels lost more than half of their value in one year

After a 50% drop year over year, prices of flat panels used in LCD TVs and monitors are expected to hold steady, according to Silicon Valley-based research firm Displaybank.

Panel shortage will be resolved by the end of March – with increase production from Asia makers – and prices might slightly increase by then.

After that, it’s everybody’s guess.

Displaybank suggests two possible scenari:

  1. The economy recovers in the second half of the year, so does the demand, and prices go up;
  2. The economy recovers in Q2. Prices increase in the first half of the year after Q1, but then prices decline again due to
    an excessive supply volume in the second half of the year

It’s perhaps time to think about that second flat panel set :-)

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