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TeleCommunication Systems (TSYS), a high flier among LBS companies, announced $75 Million in new financing. The stock jumped nearly 10% in yesterday’s trading. TSYS grew 12% in value last year after being 2008’s highest gaining stock (145% growth) among all LBS companies that Directions Magazine follows.
At the deCarta devCON conference, Jeff Rath of Canaccord Adams, an investment bank specializing in emerging markets, succinctly explained the current market bloodbath and what he forsees as the impact on the location-based services market.
Rath sees an unwinding of some of the macroeconomic dynamics for the first time in a long time. Leading up to this situation was a condition where inflation rates were trending lower and debt was cheap. This yielded an explosion of leverage and people bought a lot of things…much that they couldn’t afford, and that is becoming unwound.
"Macro economic dynamics are driving everything; companies are posting good and bad results but all stocks are trading down," said Rath. For much of the early part of the decade, Canaccord Adams’ Location Index, an index of publicly-traded location technology companies, outperformed the major market indices. In the last two years, that index has seen a huge decline where it now underperforms the market.
The hedge fund community is incredibly active in trading and represents 30-50% of the trading on any given day in the stock market. "Everyday you are hearing of hedge funds being liquidated en-mass," said Rath.
From the NAVTEQ Connections conference in San Francisco…NAVTEQ executive VP Jeff Mize revealed some stats about the coming consumer portable navigation device market at Christmas time:
PND Market Growth: The PND is showing strong growth: 20 million units will be sold this year; an 80% growth over last year. 60% of these 20 million units will be priced at less than $200; 90% will be sold from only four manufacturers (Garmin, TomTom have most market share). There is now a very diverse distribution model with PNDs sold in over 35000 retail outlets.
PND market dynamics: Expect aggressive pricing on Black Friday. There will be more emphasis on accessories and add-ons such as map updates, both downloadable and in store, plus text to speech will be a big deal. Watch for the introduction of private label retailer brands as well as a buzz around connected devices.
In this week’s issue of Business Week, the magazine reports that;the number of navigation-ready cell phones will hit 162 million this year, or more than seven times the number of such devices sold for use in cars or other nonphone gadgets, says researcher iSuppli." We posted a recent information from Networks in Motion (NIM) that indicated that of the $118 million in sales of downloaded mobile applications, 58% were for LBS apps in Q2 or $68 million. The Business Week article notes that LBS apps accounted for $92 million in Q3 and my sources tell me that Q4 will blow those numbers away.
