Garmin, the maker of portable GPS devices, has had a tremenous run. The stock traded for just above $20 in April 2005. It now changes hands at over $55.
Part of the company’s attraction is it patent portfolio, but that was tarnished recently as a federal court found that an action the Garmin had brought against arch-rival TomTom has failed. According to MarketWatch: "Garmin had brought the litigation against TomTom asserting five core patents. The decision finds that all five patents are either invalid or not infringed, TomTom said"
Interestingly enough, Garmin claims it won the legal action. Some portion of the court battle will go on. Garmin has enjoyed tremendous growth, Revenue in 2003 was $573 million. In 2005, it was $1.028 billion. But, the Septembe quarter’s revenue was actually below reveue for the second quarter this year.
If the litigation mess move against Garmin, the stocks run may be nearing an end. It has traded fairly flat since June, and the catalysts that made it a buy may be disappearing.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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