UPDATE 3-Intermap's demand could rise after Garmin deal, shrs up
Mon Mar 15, 2010 3:53pm EDTStocks
Intermap Technologies Corp
* Intermap signs 3-yr licensing deal with Garmin
* CEO sees deal helping Q2, Q3; sees real benefits 2011 on
* CEO sees more robust 2010 vs 2009
* Sees co being bought "at some point of time"
* Intermap's shares soar 18 pct, Garmin trading flat
By R. Manikandan (Adds CEO comments, details, background; updates share movement)
BANGALORE, March 15 (Reuters) - Canadian 3D map maker, Intermap Technologies Corp (IMP.TO), signed a three year contract with top U.S. navigation device maker Garmin Ltd (GRMN.O), in a deal that could make its technology a must-have in the hot navigation market, sending its shares up as much as 18 percent.
Fierce competition in the navigation market has reached new heights, with established GPS makers like Garmin and TomTom (TOM2.AS) now having to offer newer technologies as they battle the free navigation being offered by Nokia (NOK1V.HE) and Google (GOOG.O).
This could bode well for firms like Intermap, which is going to provide Garmin with 3D elevation data for the United States and Western Europe derived from its NEXTMap countrywide digital map database to Garmin.
While the deal is expected to start contributing to the company's results in the second and third quarter, the deal would really show up in its results from 2011, Intermap chief executive Brian Bullock told Reuters.
"In 2010, it is incremental but not huge. We think the real opportunity is 2011 and beyond, Bullock said.
Bullock said he expects a more robust 2010 compared with 2009 as retailers were buying more products as the hangovers that constrained volumes last year were now sold out.
Intermap's shares touched a high of C$1.90 before giving up some gains to trade up 22 Canadian cents at C$1.83 in late evening trade on the Toronto Stock Exchange. Garmin's shares were trading down about one percent at $35.60 on Nasdaq.
With the Garmin deal, Intermap has announced its entry into the big league in the navigation market, which could make other satnav firms sit up and take notice.
"From a relevancy and impact standpoint, any company that wants to compete with Garmin has to now make the decision whether they want to pay for the same dataset or not. That could be quite positive for Intermap," analyst Jeff Rath of Canaccord Adams said.
After digital map makers Navteq and Tele Atlas were bought by Nokia and TomTom in 2008, there has been consolidation among firms building software on top of maps since Nokia and Google made free navigation a standard, forcing others to offer their own ancillary services. [ID:nLDE61M17G].
Bullock said he thinks Intermap will also be purchased by a larger player at "some point of time" but he said they are not actively shopping the company.
"We believe that we can create a lot of shareholder value over the next two years and so believe our most important activity is developing in our markets," Bullock said.
Calgary, Alberta-based Intermap is remapping countries and building a uniform national databases called NEXTMap, consisting of elevation data and geometric images which will enhance Garmin's outdoor product line using superior terrain rendering.
"Next map database is the most accurate elevation model of the United States and all of Europe. It has a vastly superior elevation model by all measures," Rath said.
"Garmin is pursuing a path to have best products and the most differentiated product. The challenge for Garmin is continue to have a more superior offering in the market and that is probably one of the driving forces for a deal like this," Rath added.
Garmin products using NEXTMap data are expected to hit the market in the first half of 2010, Intermap said in a statement. (Editing by Gopakumar Warrier and Savio D'Souza)