UPDATE 4-Garmin's weak holiday forecast sends shares sliding
* Sees holiday unit sales below year ago
* Q3 non-GAAP EPS $1.02 vs est $0.69
* Q3 sales $781.3 mln vs est $703.9 mln
* Fall in average selling price slows
* Shares down 14 percent, reverse early gains (Adds conference call comments; updates shares)
BANGALORE, Nov 4 (Reuters) - No. 1 U.S. navigation device maker Garmin's (GRMN.O) forecast of a weak holiday quarter fueled concerns about PNDs' long-term survival prospects, sending its shares down almost 14 percent as investors warily eyed Google's entry into the navigation space.
The personal navigation device (PND) market, once controlled by Garmin and TomTom (TOM2.AS), has been hammered by a slump in demand and selling prices for most of this year, and last week Google (GOOG.O) dealt a further blow by unveiling plans to launch free navigation software for smartphones. [ID:nLU565010]
To add to the company's woes, competition from smartphones with navigation aids, such as Research In Motion's (RIM.TO) BlackBerry, Apple's (AAPL.O) iPhone and offerings from Palm (PALM.O) and Nokia (NOK1V.HE), is increasing.
"While these developments are interesting, we don't believe they will impact the market for PND any time soon," Chief Operating Officer Cliff Pemble said on a conference call with analysts.
Garmin, which posted a surprise rise in third-quarter profit, now expects to sell fewer units in the key holiday season quarter than it did last year, indicating that it expects weak demand.
Shares of the company dropped almost 14 percent to as low as $27.14 in afternoon trade on Nasdaq after the weak forecast. They had risen about 10 percent when the company posted a profit that blew past market expectations.
"The (third-quarter) beat, as impressive as it is, will likely do little to ease investor concerns about the sustainability of the PND business in a world of free Google mobile navigation," analyst Yair Reiner of Oppenheimer & Co said. "Against that backdrop, some holders may use any strength this morning as a pathway to a clean exit."
Garmin's shares are usually volatile on the day it reports earnings, and short interest on its stock is at about 9 percent of the total float. By comparison, blue-chip technology stocks such as Google and Apple have short interest positions below 2 percent.
STRONG RESULTS, WEAK FORECAST
"We expect to see our unit shipments increase 40 percent to 50 percent sequentially during the fourth quarter, but also anticipate pricing and margins to be in line with 2008 levels," Pemble said. Continued...
