* 3rd-quarter adjusted earnings/shr $0.74 vs estimate $0.61
* Raises full-year adjusted profit/share to $2.75-$2.90 from
* Says outlook reflects uncertainty in Europe
* Shares down 4 percent
By Sayantani Ghosh
Oct 31 Navigation device maker Garmin Ltd's
quarterly profit trumped analysts' estimates, boosted
by strong demand for dog-tracking and golf gadgets, but the
company raised its full-year forecast only modestly as it
remained cautious about Europe.
Shares of the company jumped 7 percent to $42 when the
Nasdaq opened for trading on Wednesday, but later slipped to
trade down 4 percent at $37.28.
The company is fighting sluggish demand for its GPS-enabled
handheld navigation devices by including high-margin specialized
mapping services with them.
It has also been betting on outdoor and fitness products to
drive growth and reduce dependence on navigation devices as
smartphones loaded with free mapping apps invade its market.
The company's third-quarter profit beat estimates by 13
cents but Garmin, known for conservative forecasts, raised its
full-year profit outlook range by only 5 cents.
"This suggests that expectations for the fourth quarter
might be lower than previously anticipated," said Oppenheimer &
Co analyst Yair Reiner.
He, however, added it was possible the company was just
being conservative about its outlook as usual.
Garmin now expects a per-share profit of $2.75 to $2.90 for
the full year, up from its earlier forecast $2.70 to $2.85.
The company is expecting a drop in fourth-quarter gross
margins, it said on a conference call with analysts.
Garmin added it would also spend much more on advertising in
the holiday season, which might be a slight drag on
Revenue from the company's fitness business, which makes
gadgets such as GPS-enabled watches to count calories and
monitor heart beats, slipped 6 percent in the quarter ended
This was the first-ever decline in revenue since it started
reporting as a separate segment in 2011.
"Part of it appears to be the difficult comparisons to 2011
when the company had strong sales and some product
introductions," Oppenheimer's Reiner said.
"But I think there could be some questions raised about
whether that category is beginning to face competition from
smartphones and other apps."
The company's Dutch rival, TomTom NV, trimmed its
full-year revenue forecast on Tuesday, citing falling sales of
its car navigation devices in Europe.
Garmin's third-quarter profit fell to $140.3 million, or 72
cents per share, from $150.4 million, or 77 cents per share, a
Excluding one-time items, the company earned 74 cents per
share. Total revenue rose 1 percent to $672 million.
Analysts on average had estimated earnings of 61 cents per
share on revenue of $660.9 million, according to Thomson Reuters
Sales of Garmin's outdoor products comprised 16 percent of
the total revenue and were up 11 percent at $105 million.