(Refiles to add analyst's name in last para)
* Asustek to give more details on Tuesday
* Garmin likely to close smartphone business: analyst
* Garmin shares up 1 percent
(Adds analyst commentary, shares)
By Argin Chang
TAIPEI, Oct 25 Taiwan's Asustek Computer Inc
(2357.TW) said on Monday it would end its mobile phone
cooperation agreement with Garmin (GRMN.O), clearing the path
for the navigation device maker to exit the smartphone
Asustek, which sells laptops and mobile phones carrying its
own name, is set to give more details on Tuesday, a company
"The smartphone market is seeing huge growth, but the
Garmin-Asus alliance has, to date, delivered disappointing
volumes," said Canalys analyst Tim Shepherd.
Garmin will now likely seek to close its own smartphone
business as it has indicated it is ready to do, Shepherd said.
In September, Garmin, the No. 1 U.S. maker of personal
navigation devices (PNDs), told Reuters it will decide over the
next couple of quarters the future of its struggling smartphone
unit, and is ready to exit the business if it does not achieve
A spokesman for Garmin did not immediately respond to a
request for comment.
For Garmin, the smartphone exit could improve its earnings
and ease the investments it's been making in order to try to
impact the competitive smartphone market.
"It makes sense and it wouldn't be surprising should it
prove true," Oppenheimer analyst Yair Reiner said.
Garmin could now be at liberty to pursue the business of
selling navigation apps for the iPhone and Android devices,
Its Dutch rival, TomTom (TOM2.AS), offers an application
for the Apple (AAPL.O) iPhone.
Garmin smartphone sales totalled $27 million in the June
Shares of Garmin were up 1 percent at $32.20 in early
Monday trade on Nasdaq. They have lost 15 percent of their
value in the last six months, trailing a 2 percent drop in the
broader S&P index .SPX in the same period.
The challenge for Asus would be to create a smartphone
business on its own or with a new partner.
Without the value-added differentiation opportunity in the
form of a high-quality navigation offering its alliance with
Garmin provided, Asus faces the challenge of offering something
unique in the crowded smartphone market, Shepherd of Canalys
(Reporting by Argin Chang; Additional reporting by Tarmo
Virki in Helsinki and S. John Tilak in Bangalore; Editing by