Garmin 3Q Revenue Down 11%

Garmin 3Q Revenue Down 11%
Garmin 3Q Revenue Down 11%
Garmin today announced its financial results for the third quarter 2010 with total revenue of $692 million, down 11% from $781 million in third quarter 2009. Gross margin was 50% in the current quarter a slight decline compared to 52% in third quarter 2009 while Operating margin declined year‐over‐year to 24% compared to 30% in third quarter 2009.

Garmin generated a free cash flow of $195 million in third quarter 2010 for a cash and marketable securities balance of almost $1.9 billion.

Automotive and Mobile segment revenue decreased 19% to $442 million while Outdoor/Fitness segment revenue increased 9% to $144 million, Aviation segment revenue increased 4% to $60 million and Marine segment revenue increased 1% to $46 million.

“Our auto/mobile segment posted a 19% revenue decline in the third quarter as we faced an extremely difficult comparison to third quarter 2009 when we refreshed the full PND line‐up”, said Garmin. “We also continued to incur significant losses in our mobile handset division. While PND pricing improved sequentially in the third quarter, the comparison to a very strong average selling price (ASP) in 2009 led to a 15% ASP decline year‐over‐year. Unit declines were single digits as declining market size was offset by increases in market share.”

Nevertheless Garmin sees good opportunity in the OEM side of the navigation market. “OEM initiatives provided triple digit growth in the quarter partially offsetting the impact of the PND market. We continue to invest to capitalize on the growing OEM in‐dash opportunity. We are pleased to have an expanded presence in the Chrysler 2011 vehicle line‐up including the Jeep Grand Cherokee and Dodge Charger, as well as many others, which we look forward to sharing more details about soon. We are working to secure similar deals around the globe.”

The company cut its 2010 forecast to earnings of $2.70 to $2.90 a share on revenue of $2.65 billion to $2.75 billion. Its prior view was $2.75 to $3.15 and $2.8 billion to $3 billion, respectively.

Thursday, November 4th 2010

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