This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

Garmin Recovers as Outlook Clarified

Updated from 11:24 a.m. EDT

Shares of Garmin (GRMN - Get Report) rebounded from their session lows Thursday after the company clarified earlier remarks from its chief financial officer regarding its first-quarter targets.

Reuters had reported that Garmin CFO Kevin Rauckman said first-quarter revenue for the navigational-device maker is expected to drop between 40% and 50% from the fiscal fourth quarter.

Shares of Garmin, having fallen as much as 11% on the report, pared those losses after a company spokeswoman said the report may have misconstrued the CFO's remarks. Garmin was lately down 2.6% to $54.94 on heavy volume.

"We said during our last earnings call that the overall business revenue would be down closer to 40%," says Garmin senior media relations specialist Jessica Myers. "It is important to note that our guidance has not changed since the fourth quarter earnings call."

During the Feb. 20 conference call, Rauckman said that the fourth quarter had been strong, and that the company would experience a slowdown going into the first quarter.

"Sequentially, our business came down in total, about 20%," he said during the fourth-quarter earnings call. "I think it could be much closer to 40% in the first quarter, as we look at seasonality this year."

In the fourth quarter, Garmin said revenue doubled to $1.22 billion from the year-earlier quarter thanks to strong holiday demand for the company's navigation devices. Based on Rauckman's view that the sales would fall 40%, Garmin could be expected to post first-quarter revenue of $732 million. The Thomson First Call average estimate for first-quarter revenue currently stands at $731.5 million.

On the same call, he predicted a sequential decline in personal navigation devices revenue of as much as 50% quarter over quarter.

Oppenheimer analyst Yair Reiner said in a research note that he believed Garmin "was patently misquoted." Reiner says the downtick in total revenue has been consistent with the company's prior guidance, and that he is confident with his current first-quarter targets.

"We believe the Reuters article misunderstood Garmin's comments with respect to gross margins," said Reiner. "Garmin expects personal navigation device gross margin to fall below 40% this year, as previously guided. In its prior call Garmin indicated that total revenue would be off about 40% sequentially, with PND revenue off about 50%."

A large portion of Garmin's future plans is based on their nuvifone, a combination touch-screen, worldphone, smartphone and GPS device in one neat package. But the company has been very careful about releasing much information about the product.

In the Reuters interview, Rauckman the phone should help bolster earnings starting in the third quarter and be "a profitable product" from the outset.

Combined with a warning from MEMC Electronic Materials (WFR), a maker of chip wafers, the outlooks were helping to drag down the broader tech sector and were overshadowing upbeat numbers reported after the last close from Research in Motion (RIMM).

MEMC was down 8% to $70.29, though RIM was advancing 6% to $122.72.

Nokia (NOK - Get Report), which is buying digital-map maker Navteq (NVT), eased 0.4%.

Among other widely held tech and gadget stocks, Google (GOOG) was losing 2%, while Apple (AAPL - Get Report) was up 1.3%. Intel (INTC) slipped 1.2%.

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
WFR $0.00 0.00%
AAPL $123.25 0.00%
GRMN $47.66 0.00%
GOOG $548.34 0.00%
NOK $7.70 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs