Garmin Ltd. (NASDAQ: GRMN) already saw the wrath of traders today after its CFO told Reuters in an interview that the revenue drop on a sequential basis (quarter/quarter) would see a drop of 40% to 50%.

With the last quarter showing some $1.217 Billion in revenues, you would derive a new range of $606 million to $730 million.  Before any estimate changes have been made, First Call has estimates for the quarter at $731.4 million.  When you compare that to Q1 2007, it doesn’t look so bad as the Q1 2007 showed some $492 million in revenues.

In no way can you call this good news, but…..  There is always a silver lining if you look at the big picture.  Garmin shares were trading down 10% around $50.00 in pre-market trading.  The low print was $50.18 today, under the prior 52-week low of $52.18. 

We noticed some trends peaking back in November when we saw some concerning data out of Trimble Navigation (NASDAQ: TRMB). 

One other issue to constantly watch is that Nokia (NYSE: NOK) acquisition of NAVTEQ (NYSE: NVT).  With a cash purchase price of $78.00 per share and a current share price of $64.70, you have to wonder about the reality of many thinking a Nokia regret or buyer’s remorse.  That’s the situation, even if NAVTEQ already approved the deal. Shares were above $75.00 just one month ago.  That is a wide enough arb-spread to scare many merger-arb players.  The European Commission’s extended review already gives this another 90 to 125 days before that approval answer is known.

With a high of $125.68 over the last year (October 2007), this sell-off marked a more than 60% cut in share prices.  An $11.7 Billion current market cap still seems high, but at some point enough is enough.  Things can always get worse, that is always present.  But shares are down by less than 5% at $53.84 after 90-minutes of trading.

It’s not prudent to call an all-clear and run out in the open here.  But it would also be foolish to say that you have only seen the beginning.  Sometimes "Less-Bad" is good enough.  It might not be the perfect comfort level entry for a longer-term investor, but the day traders just cleaned up this morning.

We consistently review merger-arb statistics and spreads for our special situations newsletter and we also make many general updates regarding mergers, speculation, and more on our open email distribution list.

Jon C. Ogg
April 3, 2008

Jon Ogg produces the Special Situation Investing Newsletter; he does not own securities in the companies he covers.

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