Wednesday, November 02, 2011

Garmin profit falls 46% on weak N. America sales

Garmin Ltd.'s  third-quarter profit fell 46% on persistent weakness in North America sales, though its aviation and fitness businesses continued to show strength.

The company raised its guidance for the year, to adjusted earnings of $2.30 to $2.40 a share on revenue of $2.6 billion. Its August view was $2 to $2.15 a share with revenue of $2.5 billion to $2.6 billion.

Garmin, which makes personal navigation devices, and its Dutch rival TomTom NV (TOM2.AE) face increasing competition as smartphones offer more sophisticated global-positioning-system and mapping applications. Garmin is the market leader in the U.S., while TomTom is the biggest player in Europe.

Last week, TomTom launched a cost-cutting plan after its third-quarter sales fell on waning demand for its devices. Still, it posted a better-than-expected income gain thanks to lower debt financing costs.

For the quarter ended Sept. 24, Garmin reported a profit of $150.4 million, or 77 cents a share, down from $279.6 million, or $1.43 a share, a year earlier. Excluding currency impacts and other items, earnings rose to 71 cents from 70 cents.

Revenue decreased 3.7% to $667 million.

Analysts polled by Thomson Reuters most recently forecast income of 50 cents a share on revenue of $618 million.

Gross margin widened to 51.6% from 49.7%.

The automotive and mobile segment, Garmin's largest by revenue, reported 13% lower sales. The aviation segment saw sales increase 18%. The outdoor business saw sales improve 5% as fitness sales increased 29%.

Revenue was down 15% in North America, its biggest geographic market. Sales were up 19% in the Europe, the Middle East and Africa region, and down 10% in Asia Pacific.

Shares closed Tuesday at $34.19 and were inactive premarket. The stock is up 10% year to date.

http://www.marketwatch.com

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