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Oppenheimer & Co. analyst Yair Reiner explains what Garmin needs to do to stay competitive.
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Garmin stock has been up 20% for the year but announcements from apple yesterday -- closed down more than 8%.
Yesterday with a slight rebound today.
Yeah I -- Reiner from Oppenheimer company he's an analyst there -- that more for a sign now what direction.
-- needs to go from here and -- they are facing some hurdles got your but I like to begin with why the apple news is bad news for Garmin.
Yes so what apple announced yesterday is that the mapping applications in the come preinstalled on new IOS devices.
We'll have turn by turn navigation essentially the same type of functionality.
Yet when you get our European.
GPS device from Garmin.
And so the fear is is that if people get that application for free on an apple device won't need to go -- by envisage EPS from a Garmin.
Interestingly this functionalities been available for android users for the last.
Two years for free and interestingly.
When that application became free on android devices.
Garmin and the rest of that GPS makers in the world saw their volumes and volumes begin to decline so presumably.
This will.
Put further pressure on global volumes for auto GPS devices.
Right you know it used to be not that long ago that everyone had a Garmin device -- -- purposes in their car and now I just don't see it.
Any more cracked I know another competitor Garmin TomTom did do we deal with apple so does -- need to -- a similar deal to stay competitive.
Soon to be clear what apple is buying from TomTom.
Is the underlying mapping data -- so it says file that has all the factors of where the roads are -- the addresses are the directions of the roads.
They're not buying from TomTom anything that that a -- can actually provide.
They're not getting that did -- turn by turn algorithms or the routing information all the getting his underlying data.
I can get that data that could have gotten two and three places TomTom.
Because -- got to NAVTEQ which is owned by Nokia or they could have -- to Google's I think of their choice was to go to a third party with whom they compete.
Least so okay so that's even a worse -- -- Gartman but I do know they have some interesting other technologies involving game of golf and dog.
Training programs.
What in your idea is the best -- strategy course of action for -- right now.
Yes so this listing part of -- I think that for most consumers -- is associated with -- -- GPS devices.
If you look today though those businesses only account for about a quarter of their bottom line most of garments profit today.
Comes from as you say from a golfing products from running products for aviation products for business jets and for amount -- our products.
Across all those product kept product categories Garmin is doing tremendously well I mean they're gaining share in their competitors.
They're seeing good secular growth and number of those categories.
And if you look at aviation it and and marine.
Those two markets have been under a lot of kind of cyclical pressures because of the macroeconomic situation around the world.
For Garmin has been well competitively and presumably one day those markets will recover and when they do -- extraordinarily well positioned.
OK so what about the other devices -- -- -- the most softening and do you think it's just shut down that you all together.
It's so far this -- is that.
Garmin has been very good about -- -- to squeeze out a lot of profit from -- that business has has declined.
If you look at that market it's down about 35%.
From its peak of 2008.
And yet -- margins there have held up extraordinarily well.
I think the question here is if the market continues to decline can that margin still holed up.
My sense is the Garmin has executed well we'll continue to do well but the overall business the overall opportunity we'll continue to shrink.
Probably considerable rate going forward so it's not a zero Sylvia the source of cash I think going forward.
-- certainly in terms of the top line and the bottom line growth it's gonna be ahead when I'm not nearly as losses I was innocent and he started guy here thank you got your -- -- garment on.
