TeleNav Files For IPO, Maybe Too Late (TNAV, GOOG, GRMN, S, T)

If you watched any news this week about Google Inc. (NASDAQ: GOOG) launching a free personal navigation service on its Android phones, then you know it was a bad week for Garmin Ltd. (NASDAQ: GRMN).  This wasn’t even really unknown news, although the timing caught many by surprise.   And now most IPOs coming to market are getting sold and not bought.  So if I were to tell you that a company called TeleNav, Inc. whose first line of their own description said “We are a leading provider of location-based services, or LBS, including voice guided navigation, on mobile phones” filed to come public via an Initial Public Offering the question is: what would you think?

If you can believe it, that is just what happened late Friday afternoon.  No terms were issued, but TeleNav did say that it plans to sell up to $75 million for filing purposes.   No exchange was listed and the company plans to trade under the stock ticker “TNAV” after the IPO.

J.P. Morgan and Deutsche Bank are the joint book-runners, and co-managers are listed as R. W. Baird, Canaccord Adams, Piper Jaffray, and Pacific Crest.

TeleNav’s location-based services offer real-time and personalized features and functions to navigate to users’ destinations and to easily get relevant local information. It offers a hosted service delivery model through Sprint Nextel Corporation (NYSE: S) and AT&T Inc. (NYSE: T).  It also offers this via certain carriers in other countries.

At the September 30 date the company had more than 11 million paying end users, representing under 7% of its U.S. wireless carrier partners’ total subscribers. For the first quarter of its fiscal year (Sept. quarter) the company made $4.4 million and had revenue of $36 million.  That is up year over year from $2.6 million profit from $21.5 million in revenues.  TeleNav had roughly 55% of revenue in the latest quarter come from the troubled Sprint, but it is diversifying and that is down from 61% at the June 30 quarter and down from 90% about two years ago.

But the issue is that the company may be too late.  The IPO window may have just been boarded up because of an awful spate of offerings that have made it to market of late.  And throw in Google putting in the wrecking ball for yet another free service attacking business models.  Garmin shares were just crushed on Wednesday with almost a 20% loss. Then the stock closed lower on Thursday despite a market rally and then lower on Friday with the market sell-off.

TeleNav may have great products and may be worth a premium service.  But this company’s window just got smashed with the Google Navigation launch.  It won’t eat it up immediately, and in many real points it may take some time.  But free is very hard to compete with if you do not have a monster ad platform to compete with or other services that can be used to compete with.

Hopefully the company is not too late in its filing.  Hopefully Google won’t wreck this PND, GPS, and LBS space.  Hopefully, we are not being too cynical here.  History just has a way of showing how hoping is not good to use as the primary business strategy for most businesses.  TeleNav’s filing is here.

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JON C. OGG
OCTOBER 30, 2009