UPDATE 4-Garmin Q1 profit misses market expectations

(Adds details from conference call, analyst comments)

By Purwa Naveen Raman

BANGALORE, April 30 (Reuters) - Navigation device maker Garmin Ltd (GRMN.O) posted first-quarter results that missed market estimates as demand for its products slowed and said it expects prices to fall further in 2008, sending its shares down as much as 13 percent.

Garmin and Dutch rival TomTom (TOM2.AS) dominate the personal navigation devices market, which is growing at a slower pace due to a slowdown in consumer spending and increasing competition, leading to price cuts and declining margins.

Shares of Garmin, which is known for its popular nuvi range of navigation devices, were down nearly 11 percent at $41.24 in afternoon trade on Nasdaq. They had touched a 52-week low of $39.75 earlier in the day.

"Lower-than-expected quarterly revenue is definitely concerning and would cast a doubt on them achieving their revenue guidance target of 2008," Needham and Co. analyst Richard Valera said by phone.

The company, however, backed its prior revenue and earnings outlook for the year.

First-quarter profit rose to $147.8 million, or 67 cents a share, from about $139.9 million, or 64 cents a share, a year ago. Revenue rose 35 percent to $663.8 million, down from a scorching growth of 79 percent last year as the personal navigation device market is getting saturated with more companies offering products at lower prices.

Analysts expected the company to earn 74 cents a share, before items, on revenue of $705.1 million, according to Reuters Estimates.

In a conference call, the company said it expects average selling prices to further decline by about 25 percent in 2008, down 5 percentage points from its previous outlook of a 20 percent drop.

"While some are predicting that prices will stabilize as inventories are cleared and as the market further consolidates we are anticipating further declines of approximately 25 percent during 2008," said Chief Operating Officer Clifton Pemble in the call.

The company said effective tax rate has increased to 19 percent, mainly due to a change in tax law in Taiwan, where most of the company's manufacturing operations are located.

"The change in tax rate would take a pretty significant bite as earnings move forward," Oppenheimer & Co analyst Yair Reiner said by phone.

Garmin's shares are off more than 60 percent from a high of $125.68 in October.

Shares of Dutch rival TomTom (TOM2.AS), which reported a steep drop in quarterly operating profit last week, closed down nearly 4 percent to 22.40 euros on the Amsterdam exchange.

NUVIFONE DELAYED