Garmin's Got a Rough Road Ahead

In the second quarter, analysts expect Garmin to report earnings of $1 a share, flat from a year ago and revenue of $956.4 million, up from $742.4 million a year ago.

For the third quarter, consensus estimates from Thomson Reuters peg EPS at 94 cents a share and revenue at $942.14 million vs. EPS of 89 cents a share and revenue of $728.7 million, the year before.

Garmin may get better-than-expected margins and number of devices sold, though the average selling price for the devices is likely to come down, stoking investors' fears that the company's long-term profitability is under pressure, analysts say.

Analysts also widely expect Garmin to trim its guidance for the year, though it is still likely to be above analysts' consensus, they say. Analysts are expecting earnings of $4 a share on revenue of $4.12 billion for fiscal 2008.

As competition heats up, personal navigation devices are increasingly seen as a commodity. Consumers not only have a number of choices between different PND devices for their cars, they also can choose to buy a subscription-based navigation system available on their phones.

For instance, Verizon(VZ Quote) offers VZ Navigator, powered by Orange County, Calif.-based private company Networks in Motion, that offers turn-by-turn directions to subscribers.

The launch of Apple's(AAPL Quote) iPhone has also taken the shine off Garmin. The iPhone's location awareness capabilities allow for consumers to use the device as a navigator system.