Nokia wants to get into the navigation biz. This morning it said it would offer Navteq a whopping $8.1 billion, in what would be the company's largest takeover ever.
Navteq of course, supplies its digital mapping technology to both XM and Sirius.
The world's top cellphone maker is now looking for new revenue sources as the cellphone industry matures, and acquiring Navteq will give it a nice stronghold in one of the fastest growing segments in the technology industry.
Nokia's offer values Navteq at 8.6 times 2008 sales and 24.5 times 2008 earnings before EBITDA, according to Reuters Estimates. That's some crazy payout, and an obvious reason why Navteq went with Nokia as opposed to other offers (it was widely assumed that Garmin would be making a play).
TomTom offered 5.2 times 2008 sales and 20.9 times EBITDA in July for Navteq's only big rival, Tele Atlas.
Nokia's full-speed entrance into navigation industry (which actually happened last year when it acquired German software firm Gate5) is an indication that there is a lot more behind this than meets the eye. Nokia even said it sees maps as a cornerstone of its new Internet services strategy.
"Nokia is betting big on Web 2.0 applications. The sheer scale of this acquisition means it is about much more than just turn-by-turn navigation," said Ben Wood, head of research at consultancy CCS.
How much do you want to bet the same thought can be applied to the audio entertainment industry?
[Reuters]
Great, now there will be shitty navigation services just like the nokia cell phones
Earnings before EBITDA??? What the???
Ryan, EBITDA is Cashflow.
Either your read it or typed it incorrectly.
EBITDA = Earnings before Interest Depreciation and Amortization = Cash Flow. Take out noncash such as amortization and you have free cash flow.
EBITDA = Earnings before Interest Depreciation and Amortization = Cash Flow.
oops left out the T - Taxes. My typing error.