This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Garmin Flying High

"The problem with Garmin -- as well run and promising as it is -- is that at the end of the day they are a hardware company and over time hardware margins start to decrease," says Biondo. "They can make up in volume but when margins start to decrease you see a compression in growth of earnings."

Rival TomTom's third-quarter results, which were reported Oct. 24, could offer some clues to Garmin's third-quarter margin numbers.

TomTom's average selling price for its products declined, but its gross margins improved sequentially from the second to third quarter, from 45% to 49%.

Peter Barry, an analyst with Bear Stearns, says Garmin might report similar results. "We attribute Garmin's better-than-expected gross margin to lower chip and map costs and believe it will benefit from these industry-wide cost dynamics," Barry told clients in a research note. Bear Stearns makes a market in Garmin shares.

Garmin also faces increased competition in a rapidly changing industry. In July, TomTom offered to buy main mapping supplier Tele Atlas for $2.5 billion, while cell phone maker Nokia (NOK) offered $8.1 billion in October for mapping firm Navteq. The Nokia deal is expected to close in the first quarter of 2008, while it's unclear when TomTom's TeleAtlas deal will close.

So far, Garmin has responded to these large deals with a string of distributor acquisitions in Europe. Mike Ippoliti, research director in telematics & automotive for independent firm ABI Research, says the moves will strengthen operations but are unlikely to help the company battle the larger market shifts.
3 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GRMN $41.05 -0.56%
AAPL $93.21 -0.44%
FB $117.80 -0.22%
GOOG $701.26 0.80%
TSLA $211.34 -5.00%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs