* Q4 results miss Street view
* Will not provide an outlook for 2009
* Lowers inventory by $274 mln
* Feb sales up over Jan sales
* Shares up as much as 17 pct
(Adds details from conference call, updates share movement)
By Purwa Naveen Raman
BANGALORE, Feb 23 Navigation device maker
Garmin (GRMN.O) posted lower-than-expected quarterly results on
Monday as sales of its gadgets used in cars dropped, but shares
rose 17 percent as the company reduced its inventory.
The top U.S. navigation device maker, which has been facing
inventory issues, said it reduced its inventory by $274 million
in the fourth quarter. In October, it had expected to lower
inventory by about $150 million by the end of the year.
"It's a sign that they may not have to price as
aggressively to move the inventory in a slower economic
environment," Avondale Partners LLC analyst John Bright said.
Additionally, the company, which saw higher sales in
February versus January, said it expects pricing declines to
moderate in 2009.
"We anticipate average selling price declines will moderate
in 2009 as additional competitors exit the market and retail
inventories decline resulting in less margin pressure," Chief
Operating Officer Cliff Pemble said on a conference call with
Garmin said it continued to see unit growth in both North
America and the Asia-Pacific regions, even as market for
personal navigation devices slowed.
The company, which was earlier scheduled to report its
earnings on Wednesday, said it sold 6.4 million units in the
fourth quarter of 2008, up 15 percent from a year earlier.
"In general their quarter was good enough, but their future
remains very cloudy," Deutsche Bank analyst Jonathan Goldberg
Garmin, which competes with Dutch firm TomTom (TOM2.AS),
also said it would not provide an outlook for 2009 due to lack
Garmin's fourth-quarter net income fell to 78 cents a
share, from $1.39 a share a year earlier. Excluding items,
earnings of 93 cents a share were below analysts' average
estimate of 96 cents a share.
Revenue fell 14 percent to $1.05 billion. Analysts were
looking for $1.12 billion. Revenue from the company's
automotive/mobile segment declined 17 percent to $828 million.
Gross margin was at 41.1 percent, a 320 basis point decline
sequentially, mainly due to a drop in the average selling price
during the holiday season.
Garmin said it would launch its first navigation-centric
mobile phones, the G60 and the M20, in selected markets during
the first half of 2009.
However, the company did not give details on carriers and
pricing, saying it will give further updates as the launch
Earlier this month, the company had dropped plans to enter
the cellphone market on its own, and teamed up with Taiwan's
low-cost PC maker Asustek (2357.TW) to sell phones under the
Last week, the two phones were unveiled in the Mobile World
Congress in Barcelona, the industry's biggest annual gathering.
"While its (G60) design feels outdated, the software was
superior to the majority of touch phones displayed at the
show," Oppenheimer & Co analyst Yair Reiner said in a preview
note on the company's earnings.
The G60 runs on open-source Linux software, while the M20
uses Microsoft's (MSFT.O) Windows Mobile software. The company
also aims to bring out a phone based on Google's (GOOG.O)
Android operating system towards the end of the year.
Shares of Garmin were trading up $1.54 at $16.71 Monday
afternoon on Nasdaq. They have lost almost three-fourths of
their value since February last year, when they touched a
52-week high of $64.20.
TomTom shares closed down 5 percent on the Amsterdam
(Additional reporting by S. John Tilak; Editing by Amitha