Garmin Beats Expectations, Will Push Fitness

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Garmin fared better than expected in its results for the fourth quarter ended December 26, 2009, with revenue and earnings up due to solid gains in fitness GPS products, and stabilizing in the portable GPS market.
Total revenue gained 1 percent to $1.059 billion and net income rose to $278.4 million, up from $157.7 in the quarter a year ago.
But auto/mobile GPS revenues saw a slight decline of 2 percent for the quarter y/y to $812 million and much of the growth this year for Garmin will be in non-PND products, especially outdoor/fitness products which saw revenues gain 24 percent for the quarter to $149 million.
Garmin chairman and CEO Dr. Min Kao said the company will expand distribution of fitness products to new retailers. Kao admitted that that the portable navigation device (PND) market is maturing and therefore Garmin is predicting flat to slight declines in revenues for PNDs in 2010. Unit sales are still growing in North America, and in emerging markets such as Eastern Europe, Asia and Latin America, while declining in Europe, so overall unit sales in 2010 should be flat to slightly up.
Kao also admitted Garmin was disappointed by sales of the nuvifone GPS/smartphones to date, but said the new smartphones planned for the first half this year will be better positioned competitively. The new Android based A50 nuvifone and Windows Mobile based M10 received a good reception from mobile carriers and retailers and the recent Mobile World Congress show, said Garmin.
Garmin now has a 60 percent PND share in the U.S. and a 20 percent share in Europe. It shipped 6.6 million PNDs in the fourth quarter, up 3 percent. PND average selling prices (ASPs) declined 6 percent in the quarter, slowing nicely from the full year 2009 decline of 18 percent. For 2010, ASPs for portable navi should fall by 10 percent, reaching $139, Garmin predicted.
While PND sales are maturing, Garmin says there are opportunities to boost sales in North America through advances in PND form factors and features such as connectivity as well as in OEM auto GPS.
Like TomTom, Garmin says that smartphones have not yet had a significant impact on PND sales.
The company noted research firm Canalys is predicting the total global PND market will grow slightly from 39 million in 2010 to 39.5 million.
Outdoor/fitness GPS revenues for the full year 2009 grew 10 percent to $469 million. Outdoor products such as the Dakota series will be stable while fitness products should drive the growth so the full category could see revenues increase 5 to 10 percent for the year. Revenues are also expected to increase by the same margin in aviation and marine GPS, said Garmin.

Source: Garmin

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