NEW YORK (Reuters) - Garmin Ltd (GRMN.O) posted better-than-expected quarterly profit on Wednesday on strong sales of its personal navigation devices and raised its outlook to be in line with market expectations.
But shares of the company fell 6 percent after it made an unsolicited bid for Dutch map maker Tele Atlas TA.AS, which had already agreed to be bought by rival navigation device maker TomTom (TOM2.AS), sparking market chatter of a bidding war.
Garmin’s 2.3 billion euro ($3.3 billion) offer for Tele Atlas trumped TomTom’s by 15 percent.
Garmin, the world’s largest maker of navigation devices, said its third-quarter profit rose to $193.5 million, or 88 cents a share, from about $123 million, or 56 cents a share a year earlier.
Excluding special items, profit was 89 cents a share, beating the average analyst expectation of 82 cents a share, according to Reuters Estimates.
Revenue soared 79 percent to $729 million, fueled by gains in its automotive and aviation segments.
“All areas of the business performed well, but the PND (personal navigation device) business was again the stand out, with revenue of $518 million beating our $498 million estimate,” analyst Yair Reiner of CIBC World Markets said in a note to clients.
Looking ahead, Garmin voiced its optimism about the remained of the year, and said it sees earnings exceeding $3.40 per share, on revenue of more than $2.9 billion, matching analysts view, according to Reuters Estimates.
The company had previously forecast 2007 profit of $3.15 a share on revenue of $2.8 billion.
“If you look at the U.S. market in particular, the PND category has been one of the fastest growing categories in consumer electronics,” Chief Financial Officer Kevin Rauckman told Reuters in an interview. “It’s been anywhere from 200-300 percent up all year and I think that would speak well for a strong holiday season as well.”
Devices made by Garmin, TomTom and others use signals from government satellites to pinpoint a user’s exact location. Map makers like Navteq augment that with myriad data, such as traffic conditions, nearby hotels, and whether a highway exit is on the left or right.
Garmin shares fell $5.72 to $114.76 in morning trading on the Nasdaq.
Additional reporting by Niclas Mika in Amsterdam