Garmin Q4 revenue pushed by U.S. PND market growth



Garmin's Chicago store
Garmin's Chicago store
Garmin announced today record results for the fourth quarter and the full year 2007. Its fourth quarter revenue was $1.217 billion, up 99% from last year, while the full year results are $3.18 billion, up 79% from 2006.

In the fourth quarter 2007 the Automotive/Mobile segment (PND and navigation software) revenue increased 124% to $999 million. During this quarter North America represented 68% of Garmin’s revenue, Europe 28%. Other Garmin divisions (Fitness and outdoor, Marine, Aviation) experienced double digits growth, however, the part of the PND business in the total revenue is still increasing to 82% due to the tremendous growth on this market. As a result Garmin’s revenue will be more strongly affected by seasonality, its executives expects to do 40% of their yearly PND sales during the holiday season.

Garmin expects PND prices to continue to decline 20% in 2008, at the same time the company expects its component cost to decrease 10%. As a consequence Garmin anticipates “declining gross and
operating margins due to product mix and a continued transition toward mass market levels”.

As guidance for 2008, the company remains conservative at this stage with an expected revenue growth of 40% (to $4.5 billion) while at the same time it does expect the PND market to grow (in units) 35 to 40% in Europe and over 65% in the United States (also a pretty conservative estimate, TomTom rather believes in a three digit growth for the U.S. market in 2008).


nuvifone
nuvifone
nuvifone
nuvifone
Nuvifone
Garmin executives were highly questioned by financial analysts about the Nuvifone and which role it might play in the overall revenue of the company moving forward. The only comment was that the company expects Nuvifone margins to be near or below PND margins. At this stage Garmin’s executive were not willing to comment about progress made in their discussion with mobile operators with regards to the Mobile World Congress that took place last week.

Cash and share repurchase program

Garmin generated $525 million of free cash flow in 2007, resulting in unrestricted cash and marketable securities balance of $1.1 billion at the end of the fiscal year. Garmin also announced that its board of directors approved a share repurchase program authorizing the Company to purchase up to 5 million common shares of Garmin Ltd.

Wednesday, February 20th 2008


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