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Garmin Market Details

by diane 2010-02-24 07:04

NEW YORK – As investors mentioned, Garmin is in mature market with little room for growth.

The GPS navigation device company projected 2010 earnings of $2.75 to $3.15 a share on revenue of $2.9 billion to $3.1 billion. Analysts expect $2.69 a share on $2.85 billion in revenue, respectively, according to Thomson Reuters.

The view may be above the consensus, but relative to what the company just reported for 2009, Garmin expects revenue to be flat to lower, and gross margin and earnings to fall.

Garmin's shares were recently down 8.1% at $31.68 on heavy volume. The shares are up 3.4% so far this year and have risen 86% in the last 12 months.

Garmin had been hurt by a sharp drop in demand as consumers cut back discretionary spending during the economic crisis.

It's somewhat scary to investors when a company is essentially admitting it's in a mature market. GPS is now competing with smartphones that have turn-by-turn directions and other features.

Garmin reported a profit of $278.4 million, or $1.38 a share, up from $157.7 million, or 78 cents a share, a year earlier. Excluding currency adjustments, earnings rose to $1.43 from 93 cents. Revenue increased 1% to $1.06 billion.

Analysts estimated earnings of 95 cents on revenue of $956 million.

Gross margin jumped to 45.9% from 41.1%.

Revenue in its automotive and mobile segment, the company's largest, dropped 2%, as the aviation segment saw a sales decline of 4%. Revenues in North America and Europe ware flat, while Asia sales improved by 25%.

"Our financial results for the fourth quarter highlight our commitment to a business plan focused on price discipline and profitability," said Chief Financial Officer Kevin Rauckman.



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