Garmin Q3 results beat Street; cuts '08 outlook
(Reuters) - The biggest U.S. maker of navigation devices Garmin (GRMN.O) posted better-than-expected third-quarter results but lowered its 2008 outlook, citing slowdown in economy and the continued weakening of the euro against the U.S. dollar.
For 2008, Garmin now expects adjusted earnings of $3.78 a share on revenue of $3.6 billion, against its earlier expectation of $4.13 a share on revenue of $3.9 billion.
"The new targets are not exciting, but they are not awful," said analyst Yair Reiner of Oppenheimer & Co, adding that the targets seemed achievable.
On Tuesday, Garmin's Dutch rival TomTom (TOM2.AS) lowered its 2008 outlook, giving strength to expectations that Garmin will follow suit.
Garmin, which has been facing inventory issues, said it was taking steps to reduce inventory levels by about $150 million by the end of the year.
Garmin also said the development of its smartphone, nuvifone - whose launch has already been delayed twice due to carrier issues - is on target for launch in the first half of 2009.
The company faces stiff competition from longer established players such as Nokia (NOK1V.HE), Research In Motion Ltd's (RIM.TO) BlackBerry, Apple's (AAPL.O) iPhone and newly-launched G1 phone by HTC Corp (2498.TW).
SATISFYING QUARTER
For the third quarter, Garmin topped market estimates by 4 cents a share, before items, and its revenue rose 19 percent to $870 million.
"The Street had clearly been girding for the possibility of a meaningful shortfall. This slight beat may therefore feel like a big victory," Reiner said.
The company posted revenue growth in all its segments, except marine, which declined 8 percent. While Garmin posted revenue growth in North America and Europe, its revenue in Asia was down 21 percent.
Garmin shares have lost more than 80 percent of their value since touching a 52-week high of $124.75 in October last year, as intense competition weigh on its prices and margins. They rose 3 percent to $22.15 in trading before the bell. They closed at $21.43 Tuesday on Nasdaq.
Shares of TomTom were trading up 1 percent at 5.76 euros on the Amsterdam exchange.
(Reporting by Purwa Naveen Raman in Bangalore; Editing by Anil D'Silva, Amitha Rajan)
