The U.S. military’s Global Positioning System (GPS) offers a ready-made satellite constellation that Olathe, Kan.-based Garmin International has been exploiting commercially. The company is supporting a growing number of consumer navigation and location applications that have caught the attention of Wall Street.

Parent company Garmin Ltd. [Nasdaq: GRMN] has enjoyed a rising stock price and favorable reviews from analysts as a reward for its strategy of offering innovative GPS products to the commercial market. The company’s resilience in the face of a weak economy shows the merit of designing and marketing products that target distinctive niches.

Marc Nabi, the satellite analyst at Merrill Lynch, recently issued a positive report on Garmin after spending time with Chief Financial Officer Kevin Rauckman. Nabi said that Garmin is performing well, despite the economic slowdown. Indeed, the company’s stock price closed on April 16 at $38.89 a share – a 52-week high.

Special Delivery

Garmin offers GPS products for general aviation, marine, outdoor recreation, automotive and wireless applications. Its diverse product lines help to insulate the company from weakness in a single sector. To that end, the company continues rolling out new products to upgrade GPS equipment already in use.

For example, a “sluggish” marine GPS market is a near-term concern to Nabi. However, “Garmin’s incremental distribution, new non-marine devices and select new marine devices should help offset potential weakness,” Nabi said.

One reason for Nabi’s optimism is Garmin’s plan to rollout new products. Garmin will unveil a new device in its StreetPilot line later this year. As a licensee of Palm technology, Garmin has developed the iQue 3600 personal digital assistant (PDA), a handheld device that integrates wireless and GPS capability.

Garmin is focusing on engineering know-how to drive its new products and product enhancements.

The company is patenting a series of geolocation games that use GPS technology to turn the outdoors into a game board. GPS games are available on three Garmin products, including the new handheld Geko 201, which is designed to tap the increasing benefits of GPS technology in the outdoor recreation market.

The Geko 201, given a retail price of $149, is a waterproof GPS device that provides basic navigation capabilities. The device can pinpoint a user’s location to within 10 feet.

Garmin is taking strides in the development of its GPS product line for aviation users. For example, Cessna Aircraft Co. late last month chose the Garmin G1000 integrated avionics system for the aircraft manufacturer’s new Citation Mustang business jet. Garmin’s flightdeck in the Mustang business jet will provide information about aircraft attitude, engine instrumentation, weather data, traffic and terrain to simplify operation, enhance situational awareness and increase flight safety, company officials said.

The Garmin G1000 will be standard equipment on all of Cessna’s Mustangs. With more than 300 orders for the new Mustangs, Garmin will benefit from demand for the new aircraft. Cessna officials expect to receive Federal Aviation Administration certification for the Mustang in mid-2006 and begin initial deliveries in late 2006.

Cessna is the launch customer for the G1000, said Pete Brumbaugh, a senior media relations specialist at Garmin. The product is designed as a flexible platform that could be used in other business jets and in the general aviation market, he said.

Sales of the G1000 should open a new revenue stream for Garmin by 2004, Brumbaugh said.

The price of Garmin’s high-end integrated cockpit will be between $80,000 to $100,000. That pricing is much higher than that of Garmin’s current lineup for the aviation market niche, Nabi noted.

In addition, the new integrated flightdecks that Garmin will supply as standard equipment on the business jets mark a crossover from the company’s traditional aviation niche of retrofitting propeller aircraft for the general aviation market. Other business jet models also may use Garmin’s integrated product since it is more advanced and less expensive than the offerings of competitors, Nabi added.

Family Time

Earlier this month, Garmin received Federal Communications Commission approval to operate family radio service (FRS) transceivers that display location information. Garmin’s Rino 110 and 120 radios allow users to find other radio users through a new feature called “location polling.” Location reporting and location polling add safety and security applications to the Rino units that will allow family members to find each other at large outdoor venues or in the wilderness.

The new feature allows Rino owners to pinpoint the location of users within a range of two miles and navigate to that location, company officials said.

Garmin also is targeting aficionados of national parks with the introduction last month of its latest cartographic product, MapSource 24K TOPO. The device is a complement to Garmin’s line of handheld GPS devices that have electronic mapping capabilities. The 24K TOPO CD offers topographic data for most of the national parks, national forests and recreational sites in the United States. Information displayed includes trails, land contours, summit elevations, park amenities and points of interest. The map data is comparable to topographic data provided by U.S. Geological Survey maps, Garmin officials said.

“In today’s economic environment, we feel very fortunate to be as successful as we are,” Brumbaugh said. “We follow a proven strategy of providing affordable, easy-to-use, quality-designed products that simplify navigation and keep people on course.”

The company’s navigation products were used by U.S. troops during the war in Iraq. A number of U.S. soldiers purchased handheld units for use in the conflict and media reports showed the devices in action. –Paul Dykewicz

(Pete Brumbaugh, Garmin, 913/397-8200; Marc Nabi, Merrill Lynch, 212/449-2468)