GArmin Cuts 2008 Outlook...Delays NuviPhone

[+TexasGringo]

News Article Here:

 

http://biz.yahoo.com/rb/080730/garmin.html

[GeoBobC]

Down 18% today to a new 52 week low. If you're management, you either (a) cut costs by doing things like slashing customer service, or ( try to increase sales by improving customer service. (A) is much more likely.

[+Nozzletime]

C) Go back to making products that don't require A or B.

 

Down 18% today to a new 52 week low. If you're management, you either (a) cut costs by doing things like slashing customer service, or ( try to increase sales by improving customer service. (A) is much more likely.

Edited July 30, 2008 by Nozzletime

[jmedlock]

C) Go back to making products that don't require A or B.

 

Down 18% today to a new 52 week low. If you're management, you either (a) cut costs by doing things like slashing customer service, or ( try to increase sales by improving customer service. (A) is much more likely.

 

Also, probably outsource (more?) development to China.....

[+RRLover]

News Article Here:

 

http://biz.yahoo.com/rb/080730/garmin.html

Interesting, that article and the editing are attributable to Magellan's customer service staff. ;^)

 

Norm

[+Team Chinook]

They make their money on Nuvi...not the colorado, Oregon, 60Csx, etc. So that is where their development and support efforts are. Hikers/geocachers are in the back of the bus.

 

Garmin has offices in the US, UK, and Taiwan...from their 8k

 

Total Quarter revenue of $912 million, up 23% from $742 million in second quarter 2007

· Automotive/Mobile segment revenue increased 24% to $632 million in second quarter 2008

· Outdoor/Fitness segment revenue increased 54% to $119 million in second quarter 2008

· Aviation segment revenue increased 15% to $90 million in second quarter 2008

· Marine segment revenue decreased 11% to $71 million in second quarter 2008

· North America and Europe continued to experience growth:

· North America revenue was $576 million compared to $455 million, up 27%

· Europe revenue was $307 million compared to $257 million, up 19%

· Asia revenue was $29 million compared to $31 million, down 6%

· Gross margin remained solid at 45.8% compared to 48.2% in first quarter 2008 and 50.5% in second quarter 2007

· Operating margin was up 20 basis points sequentially to 26.2% in first quarter 2008 and was down compared to 32.5% in second quarter of 2007

· Diluted earnings per share increased 21% to $1.19 from $0.98 in second quarter 2007; excluding foreign exchange, EPS increased 18% to $1.18 from $1.00 in the same quarter in 2007. EPS includes $0.25 related to a gain of $66 million from the tender of our Tele Atlas N.V. shares.

 

 

Year-to-Date 2008 Financial highlights:

 

· Total revenue of $1.58 billion, up 28% from $1.23 billion year-to-date 2007

· Automotive/Mobile segment revenue increased 31% to $1.08 billion in year-to-date 2008

· Outdoor/Fitness segment revenue increased 38% to $190 million in year-to-date 2008

· Aviation segment revenue increased 17% to $175 million in year-to-date 2008

· Marine segment revenue increased 4% to $127 million in year-to-date 2008

· All geographic areas experienced growth:

· North America revenue was $988 million compared to $777 million, up 27%

· Europe revenue was $517 million compared to $405 million, up 28%

· Asia revenue was $71 million compared to $53 million, up 34%

· Diluted earnings per share increased 15% to $1.86 from $1.62 in year-to-date 2007; excluding foreign exchange, EPS increased 18% to $1.87 from $1.59 in year-to-date 2007. EPS includes $0.27 related to a gain of $72 million from the tender of our Tele Atlas N.V. shares.

 

Business highlights:

 

· Strong sales in our automotive/mobile, aviation, and outdoor/fitness segments put them on track for double-digit revenue growth again in 2008.

· 3.9 million units sold in the second quarter of 2008, up 54% from the same quarter in 2007; year-to-date units sold increased 64% from the same period in 2007.

· Independent market share research indicates that we have expanded our leadership position in the North American PND market with approximately 55% share, which is up sequentially from 43% in first quarter. We maintained a market share of approximately 20% in Europe. Garmin continues to lead in world-wide PND market share.

· We have begun work to expand our principal North American aviation production facility in Olathe, Kansas with expected completion in Q4 2009.

· Targeted advertising and promotional programs for the spring season drove solid second quarter sales. We also announced our title sponsorship of Team Garmin/Chipotle which competed in the Tour de France using the Edge ® 705.

· Completed the acquisition of our Belgian/Luxembourg and Finnish distributors in second quarter, and announced our intent to acquire our distributors in Austria and Portugal. These activities are part of our ongoing efforts to further improve our market share in Europe.

· Repurchased 5.2 million shares of GRMN in the second quarter.

[+Team Chinook]

Executive overview from Dr. Min Kao, Chairman and Chief Executive Officer:

 

“Despite the challenging macro economic conditions, Garmin experienced another quarter of growth in 2008 and continues to demonstrate our solid leadership position in the industry. Our strength in the automotive/mobile segment in the face of a slowing economy demonstrated that our products continue to be well-positioned to take advantage of the ongoing demand for portable navigation devices. The latest nüvi ® 2x5 products delivered during the second quarter provide yet more features for cost-conscious consumers including picture navigation and compatibility with MSN Direct’s real time content service. We also delivered the high-end nüvi ® 800 series in the second quarter which offers industry-leading speech recognition in the personal navigation sector. Our nüvi ® product offerings continue to support our strategy of extensive market segmentation, drawing in customers with compelling, competitive features, and useful content integrated into easy-to-use products at many attractive price points. We believe this approach will continue to garner growing market share and drive strong results throughout the remainder of 2008. Although we continue to earn industry-leading market share, the sector is not growing as rapidly as earlier anticipated and consumers appear to be more cost-conscious than ever; therefore, we will be lowering our full year revenue growth expectations.

 

Revenue in our outdoor/fitness segment grew rapidly when compared to the year ago quarter due to the strength of our product introductions in the quarter including the Colorado™ series, the Forerunner ® 405 and the Edge ® 705. We look forward to increased sales generated by our recently announced title sponsorship of Team Garmin/Chipotle which just completed the Tour de France, as well as our new Oregon™ series which provides rugged and durable touch screen products to the outdoor market. We still see considerable growth opportunities for this segment during the second half of 2008 and are raising revenue growth estimates accordingly.

 

Our aviation segment continued to drive growth in the business during the quarter, as positive response to our G1000 ® cockpit continued. We were pleased to announce our relationship with Cirrus Design Corp. in the second quarter and look forward to the substantial growth this offers to our aviation segment. This cockpit win is especially important as we are starting to see lower aircraft production levels and weaker demand for our aftermarket and portable products. While we believe our aviation segment will continue to grow in the second half of 2008, we will be reducing the full year revenue guidance due to the macroeconomic conditions facing this segment, specifically high fuel prices.