Garmin Results Beat Wall Street

BANGALORE (Reuters) – Navigation device maker Garmin Ltd beat Wall Street estimates with a 70 percent jump in quarterly profitas revenue in its automotive and outdoor/fitness segments climbed,pushing shares up more than 5 percent.

Garmin’s fourth-quarter profit rose to $307.3 million, or $1.39cents a share, from $180.3 million, or 82 cents a share, a year ago.Excluding items, earnings were $1.31 a share. Revenue almost doubled to$1.23 billion.

Analysts on average expected the company to earn $1.11 a share,before items, on revenue of $1.03 billion, according to ReutersEstimates.

Garmin benefited from strong holiday sales, with the number of unitssold rising to more than 5.5 million during the fourth quarter ? onlyslightly below the total number of units sold in all of 2006.

The company’s shares have dropped about 35 percent since Garminreported third-quarter results in late October last year, mainly due tostiff competition from Dutch rival TomTom NV and a sluggish U.S. economy fueling concerns about future growth prospects.

For 2008, the company expects to earn more than $4.40 a share onrevenue exceeding $4.5 billion. Analysts expects earnings of $4.41 ashare, excluding items, on revenue of $4.23 billion.

"The guidance is solid…But it appears that margins are lower thanwhat we had previously modeled," Needham & Co analyst RichardValera said.

Garmin on Wednesday also said its board authorized the buyback of 5 million shares.


Since its third-quarter earnings announcement, Garmin has lost a bidding war for digital map maker Tele Atlas ASto TomTom and also announced the launch of its touchscreen nuvifone,which is a mobile phone loaded with navigational technology at theheart of the device.

Garmin expects the nuvifone to be released during third quarter andsaid initial unit shipments will begin during the second half of 2008.

Needham’s Valera said nuvifone may not have any material impact in2008. He has a "buy" rating and a price target of $85 on the stock.

Shares of Garmin rose to a high of $73.29, before falling back totrade up more than 1 percent at $70.40 in morning trade Wednesday onNasdaq.

TomTom’s stock was trading up more than 2 percent at 39.65 euros onthe Amsterdam exchange, indicating Garmin’s strong quarterly resultsbode well for the entire industry.

TomTom will report fourth-quarter results on Thursday.


Garmin, the market leader in the United States with around 50percent market share, is facing a threat from TomTom in its stronghold.

According to a U.S. market research firm, the Dutch company had soldmore units than Garmin in November, 2007, due to lower pricing.

"Time will tell if that share they gained in November is their’s orwhether it was a fleeting response to great promotional prices,"Oppenheimer & Co analyst Yair Reiner said.

Deutsche Bank analyst Jonathan Goldberg said TomTom may prove to bemore aggressive than previously expected. "In fact, they got a littletoo aggressive and ran out of products in the fourth quarter," he said.

Garmin is fighting back and trying to do in Europe what TomTom isdoing in the United States. The company is trying to improve itscurrent 20 percent market share by acquiring European distributors.

"I don’t think they can surpass TomTom (in Europe), but I think theycan narrow the gap and the process has already begun," Goldberg said.

(Reporting by Purwa Naveen Raman; Editing by Pratish Narayanan)

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