satellite navigation system
Quick, when was the last time you bought a dedicated GPS device? We're betting it's been awhile.

Sales of pure GPS hardware units -- as opposed to devices that run navigation apps in addition to other software and functionality -- have plummeted in the U.S., from a high of 18 million in 2009 to 7.5 million just three years later.

The main culprit is advances in technology. These days, a user of Apple (AAPL) iDevices, Nokia's (NOK) phones and tablets or basically anything that runs on Google's (GOOG) Android operating system has a built-in app or a wealth of navigation software to choose from. GPS apps are also usually far cheaper than a dedicated piece of hardware.

Not only that, but during the same time, GPS functionality made its way into the systems of automobiles, and once that segment was penetrated, there was no chance of a U-turn. These days, dashboard navigation -- typically bundled with apps to control other activities -- is a popular option in many car models.

In Need of a Compass

That's been a damaging trend for the companies in the GPS device business. One that leaps immediately to mind was once nearly synonymous with the technology: Garmin (GRMN).

Once upon a time, Garmin was an investor favorite, with its shares touching $123 apiece in September 2007. The good times didn't last. As the GPS market broadened and offerings became more plentiful and cheaper, Garmin got lost in the woods. In 2008, its stock bottomed out at less than $15 per share.

Since then, Garmin has made a bit of a comeback thanks to its continued involvement in specialty GPS segments. The company trades in the $50 range now. Most notably it's doing well in aviation, where it saw a 25 percent year-over-year gain in revenue this past Q4. It's also managed to capitalize on the trend for wearable fitness monitoring products, posting nice gains in that segment as well.

But neither is going to make Garmin a growth stock. In that quarter, aviation took in around $70 million and fitness a bit under $120 million, neither of which was a massive contributor to the firm's $760 million in total revenue.

Despite some share-price-boosting optimism lately -- not least because Citigroup (C) released a glowing analyst note on the company in March -- both top and bottom lines for the company in fiscal 2013 were down notably from 2009, Garmin's heyday.

Poor Tom

Netherlands-based TomTom (TMOAF) -- loosely speaking, the Garmin of Europe -- has struggled for the same reasons. In the salad days of the last decade, its Nasdaq-traded stock nearly touched $30 per share; these days, it can be had for less than $7. Like Garmin, TomTom has struggled to broaden its product range with popular offerings -- a line of GPS-packed sports watches the company launched last year, for example, brings in only a fraction of the company's total revenue.

Speaking of revenue, the top lines from three of the company's four business units were down notably in fiscal 2013. Only its telematics division saw a significant year-over-year increase during the year, growing by 16 percent to 85 million euros ($118 million).

That's encouraging, but the division (essentially, TomTom's products for businesses) is the smallest out of the four, taking in less than 7 percent of total revenue in 2013.

Driven Away

In a sense, both Garmin and TomTom have fallen victim to a classic cycle in business. They stood atop a specialty market, and profited handsomely from their niche, but are now fighting to stay relevant now that their core offerings are essentially commodity goods.

These days, you can find GPS functionality built into your cellphone, tablet, and the dashboard of your car. Who needs a dedicated device anymore?

Motley Fool contributor Eric Volkman has no position in any stocks mentioned. The Motley Fool owns shares of Apple, Citigroup and Google (A and C shares). Try any of our newsletter services free for 30 days.

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Yup, come onutwith a Smart Phone, otherwise, off into the Sunset, like so many businesses, that failed, after new technology unsurped their product.

April 30 2014 at 12:24 PM Report abuse rate up rate down Reply

I love my Tom Tom!

April 30 2014 at 11:57 AM Report abuse rate up rate down Reply
Dragisa Mladenovic

Ordinary dividend payments will be restarted after a two-year pause, supplemented with a $1.4 billion special dividend payout. Nokia will spend $2.8 billion on a two-year debt reduction program, and will authorize $1.7 billion of share buybacks.
June 17, 2014, that an ordinary dividend of 0.11 euros per share be paid for the fiscal year 2013. In addition the Board proposed that in line with the capital structure optimization program decided by the Board a special dividend of 0.26 euros per share be paid. The ex-dividend date would be June 18, 2014, the record date June 23, 2014 and the payment date on or about July 3, 2014.
Balance sheet highlights:
-- Nokia Group ended Q1 2014 with a strong balance sheet and solid cash
position with gross cash of EUR 6.9 billion and net cash of EUR 2.1
billion compared to EUR 9.0 billion and EUR 2.3 billion, respectively, at
the end of Q4 2013. The sequential decline in Nokia's gross cash was
primarily due to repayment of certain debt facilities totalling
approximately EUR 1.8 billion during the first quarter 2014.

-- If the transaction to sell to Microsoft substantially all of our Devices
& Services business would have closed before the end of the first quarter
2014, Nokia would have ended the quarter with gross cash of approximately
EUR 10.5 billion and net cash of approximately EUR 7.1 billion.
Risto Siilasmaa, Nokia Chairman, commented on the company's progress:
With the closing of our transaction with Microsoft, Nokia begins a new era. We are confident in our future. Nokia's vision is to be a leader in technologies which will be important in a world of billions of intelligent connected devices. With our strategic direction now set, our highly talented teams can focus fully on realizing our vision by building on Nokia's three strong businesses - Networks, HERE, and Technologies. In all three businesses, Nokia has a solid foundation and we continue to see attractive opportunities to invest in growth. Additionally, we will focus on managing our capital effectively, and we have announced a comprehensive EUR 5 billion program to optimize our capital structure.
In the first quarter of 2014, all three of our businesses delivered solid performance. In particular, we were pleased by the continued strength of Networks' underlying operating profitability. Under the leadership of Rajeev Suri, Networks has become an innovation leader, with tremendously improved strategic focus and financial results. I believe Rajeev is the right person to lead Nokia forward, and that his passion for technology will help ensure that Nokia continues to deliver technologies that have a positive impact on people's lives.
Short sale are slotter today who survive today will be wiped out on Nokia upgrade tomorrow yes go NOK

April 29 2014 at 12:54 PM Report abuse rate up rate down Reply