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UPDATE 2-Garmin to recall 1.25 mln PNDs due to fire hazard
August 25, 2010 / 1:35 PM / in 7 years

UPDATE 2-Garmin to recall 1.25 mln PNDs due to fire hazard

* Says recall won’t affect results

* Says battery supplier to share replacement cost (Adds details, analyst comment, updates share movement)

Aug 25 (Reuters) - Garmin Ltd (GRMN.O) said it was recalling about 1.25 million personal navigation devices (PNDs) because of a potential fire hazard from overheating batteries, but did not expect the recall to hurt its results.

The No.1 U.S. PND maker said the recall affected its nuvi range of devices with batteries by a third-party supplier within a defined date code range and a specific printed circuit board design.

It said the battery supplier has agreed to share the cost of replacement packs.

The recall comes in the backdrop of a steep decline in PND sales, hurt by the growing popularity of navigation-enabled smartphones.

“I don’t think it means much. Product recalls in the consumer electronic space are not unusual and recalls involving battery issues are fairly common,” Yair Reiner, an analyst at Oppenheimer & Co said by phone.

He added that a problem with Apple’s (AAPL.O) 3G iPhone’s power adapter in 2008 did not seem to quell demand for the product.

PND sales accounted for about half of Garmin’s total revenue in the last quarter. The company sold 4 million PND units in the last quarter.

The battery overheating problem has been identified in fewer than 10 cases and none of the reported incidents caused injury, the company said in a statement.

About 796,000 of the recalled units were sold in the United States, Garmin said.

Garmin shares were trading down 10 cents at $26.45 in morning trade on Nasdaq, after hitting a new 52-week low of $26.11. They have fallen more than 11 percent in the past year.

The company’s shares are usually heavily shorted, with short interest sometimes rising to more than 10 percent of total float. In comparison, blue-chip technology stocks such as Google (GOOG.O) and Apple (AAPL.O) have short interest positions below 2 percent. (Reporting by Sayantani Ghosh in Bangalore; Editing by Vyas Mohan)

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