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www.garmin.com 
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11/1/07 - Garmin’s Stellar Quarterly Results
For the three months ending Sept. 29, Garmin said it earned $193.5 million, or 88 cents per share, compared with $123 million, or 56 cents per share, a year ago. After factoring out the effects of exchange rates, earnings per share were 89 cents, a jump of 78% from earnings per share of 50 cents for the comparable quarter last year. The results handily exceeded the consensus estimate of 82 cents per share, according to an analyst survey conducted by Thomson Financial.
Quarterly revenue jumped to $728.7 million, up 79% from the revenue of $408 million for the same three months last year - again easily eclipsing the Wall Street forecast of $683.2 million.
Garmin Chairman and Chief Executive Min Kao told analysts that he expected increased marketing and a strong lineup of new devices to help fuel growth through the remainder of the year, although he said profit margins would likely suffer.
'We expect pricing and market compression to intensify during this holiday season,' Kao said.
Sales of navigation devices used in cars and trucks more than doubled, reaching $519 million, while sales in Garmin’s aviation segment rose 27% to reach $74 million. Sales in the outdoor and fitness segment totaled $88 million, rising 24%, while revenue in the marine segment cruised ahead by 17%, reaching $48 million.
Sales in North America soared 71%, reaching $454 million, while revenue in Europe advanced a sizzling 89%, reaching $227 million. Asia, a promising-but-still-new market, contributed sales of $48 million, more than double the comparable quarter last year.
Garmin said its accelerating performance in Europe was helped by the fact that it recently bought its distributors in France and Germany, which has helped it grab market share in both markets. Now it’s hoping to replicate that business model - and generate similar successes - in Denmark, Italy and Spain, and is now buying out distributors in all three nations.
The company boosted its earnings guidance for the year, telling investors it was looking for revenue of more than $2.9 billion and profits in excess of $3.40 a share. It was only last quarter that Garmin was predicting revenue of more than $2.8 billion and profits of more than $3.15 per share.
Currently, the consensus Wall Street estimate for this year is for Garmin to earn $3.42 a share on revenue of $2.9 billion.
Garmin makes several types of highly rated navigation devices, including portable Global Positioning System (GPS) units. Several received No. 1 ratings from such publications as Consumer Reports.
Some of those GPS devices retail for as little as $100, and are used by hikers, travelers and hobbyists. The low-cost nature of the devices has even touched off a new global game called 'geocaching,' which is a combined treasure hunt, auto rally and high-tech exploration opportunity.
Garmin is the market leader in all those categories, and in the production of automobile GPS systems, which has made it a Wall Street darling. That’s one reason the stock more than doubled in recent months, reaching a high of $125.68 in late October. Garmin’s shares ended the regular trading day yesterday (Wednesday) at $107.40, down $13.08, or 10.86%.
They rebounded a bit in after-hours trading yesterday, climbing $1.08 each, or 1.01%, to reach $108.48. Shares have traded between $44.53 and $125.68 in the past year.
Citing Garmin’s strong financial performance, JMP Securities (JMP) Senior Analyst Ingrid Ebeling today (Thursday) reiterated the firm’s 'market outperform' rating on Garmin’s shares and raised her target price from $100 to $140 per share.
Article provided by Money Morning.
