Harman International ( HAR) said its profits for the 2008 fiscal year will probably miss estimates because of pricing pressure in the market for portable navigation devices. For the year ending June 30, Harman now expects adjusted earnings of $3 to $3.10 a share, before merger costs of 13 cents a share, but including the effect of the company's share buyback.
Analysts are looking for a profit of $4.31, according to Thomson Financial. Shares of Harman, a maker of speakers for cars and home-stereo systems, sank 13% to $59.99 in premarket trading Monday. "While the growth fundamentals of our core business remain sound, the difficult
portable navigation devices environment presents a challenge," the company said. "As we have indicated previously, we will be launching a record number of automotive infotainment platforms in 2008. Although, we are not happy with the higher than planned R&D engineering and material costs, the additional investment is necessary to deliver the new platforms to our valued customers. Harman continues to have excellent business prospects, and we are confident that we will capitalize on these opportunities as we position our company to achieve its full potential." Last fall, Kohlberg Kravis Roberts and Goldman Sachs ended their plan to buy Harman and instead agreed to invest $400 million in the company.
GPS Devices Throwing Harman Off Course