To add insult to injury, Garmin lowered guidance. For 2010 it sees $2.70 to $2.90 EPS and revenues of $2.65 to $2.75 billion versus Thomson Reuters estimates of $2.98 EPS and revenues of $2.88 billion. Gross margin was put at 49% to 50%.
As you guessed it would, that smartphone they offered for navigation was a flop. It continued to see significant losses in the mobile handset division.
The contraction is coming from its automotive sector, which fell by a whopping 19%. Its other segments are growing as outdoor/fitness rose 9%, aviation rose 4% and marine rose 1%. Asia grew by 54% but North America fell 18%. Total units shipped fell 1% to 3.8 million units. Gross margin fell 2 full points to 50% in the latest quarter, while operating margin in the third quarter was 24%.
There are some mixed numbers here, but the core business is likely to face continued challenges as many of the same services that the car-based Garmin offers are now free or can be bundled cheaply on many smartphones.
The real verdict comes from the stock reaction. Shares are down over 8% in reaction at $30.24 this morning versus a 52-week trading range of $26.11 to $40.47.
JON C. OGG
Top Gaining Stocks
Top Losing Stocks