Hugh Nibley
"Yah is, of course, God Jehovah. Liyah means the possessive, 'To God is the guidance,' hona (Liyahhona). That's just a guess; don't put it down. But it's a pretty good guess anyway." (Teachings of the Book of Mormon, lecture 14, p. 216)
“Our Fathers Called It Liahona Which is Being Interpreted, a Compass”
Alma is the first prophet to give us the name of this famous compass. Of course, this was no ordinary compass. Most compasses work by responding to the earth's magnetic field; the Liahona, on the other hand, worked not according to magnetic fields, but according to their faith in God (v. 40).
"It is believed by some that the word Liahona means 'To God Is Light'; that is to say, God gives light as does the sun." (Book of Mormon Symposium Series, edited by PR Cheesman, MS Nyman, and CD Tate, Jr., 1988; 1 Nephi, p. 244)