Sunday, July 27, 2008

Precision Ag Update

Hat tip to Daniel Wahl ("Quick Notes") for noting Trimble Navigation's (Nasdaq: TRMB) earnings release last week. Trimble has a division that competes with Hemisphere GPS (HEM.TO) in the precision ag space. Daniel quoted this excerpt from Trimble's conference call:

"Second quarter 2008 Field Solutions revenue was $90.1 million, up approximately 63 percent compared to revenue of $55.3 million in the second quarter of 2007. Revenue growth was driven primarily by strong demand for agricultural products."

Daniel sees this as bullish for Hemisphere, and I agree. This space seems big enough for more than one firm to do well.

Hemisphere's 2Q conference call is scheduled for Tuesday morning.


Daniel said...

I'm excited to see HEM's earnings.

The cool thing about Trimble's results (within their ag business) is that they saw a slight increase in sales when, seasonally, they should have seen a decrease.

If HEM shows the same, it would be very good news for the business, and possibly for the stock.

Honestly, I think results are "in the bag" as far as N. America is concerned, though probably better than expected by a decent enough amount.

The potential for a surprise to the upside will come later this year, if international sales do better than expected. Or HEM is bought out.

DaveinHackensack said...

Who do you see buying HEM out? Deere? Trimble?

Daniel said...

Not Deere. Trimble, Raven, or Hexagon making a bid wouldn't surprise me.

The justifications for further consolidation in the sector are stronger than ever--and the cash is there to get deals done.

Hemisphere will either buy more, or get bought. At least in my opinion.

Daniel said...

Well, 6 cents is kind of a bummer. I think most people were expecting 8 to 11.

DaveinHackensack said...

It looks like M Partners was pretty close, with the 7 cent estimate.

Someone asked a follow up question on the HEM thread on the VIC. No response there from Edelheit yet.