TeleNav IPO: On a collision course with Google?

Posted Nov 3rd 2009 12:00PM by Tom Taulli
Filed under: Google (GOOG), AT and T (T), Sprint Nextel Corp (S), Initial Public Offerings, Garmin Ltd (GRMN)

Founded in 1999, TeleNav was one of the first companies to deploy GPS navigation on a cell phone in North America. Now, the company has more than 11 million paying end users.

What's next? TeleNav has filed for an IPO.

The flagship of the company is the GPS Navigator, which is more than just a GPS device with cool features like real-time traffic alerts, weather content, route-planning and so on.

TeleNav's main distribution partners include Sprint (NYSE: S) and AT&T (NYSE: T). In these deals, the company gets a cut of a monthly subscription fee, either as a flat fee or a revenue sharing agreement. No doubt, this is a great way for mobile carriers to pump-up their average-revenue-per-user numbers, which is critical.

As a result, TeleNav has posted strong growth numbers. For fiscal years of 2007 to 2009, revenues spiked from $27.7 million to $110.9 million. And, for the latest quarter, revenues came to $36 million.

Despite all this, there is a nagging concern: Google (NASDAQ: GOOG). The company recently announced that it would release a free voice-guided navigation system on Android 2.0. Even worse, the price tag will be $0.

Obviously, this is a disruptive threat. In fact, on the Google news, shares of GPS operators -- like Garmin (NASDAQ: GRMN) and TomTom -- got hammered.

So, the TeleNav IPO could certainly get some headwinds.

Tom Taulli is the author of various books, including The Complete M&A Handbook.

Tags: featured, goog, grmn, IPO, s, t, TeleNav, tomtom