Updated from 10:25 a.m. EDT
lost ground Wednesday after the company missed analysts first-quarter earnings targets amid the worldwide economic downturn.
The Cayman Islands-based digital-navigation device maker posted net income of $147.8 million, or 67 cents a share, rising from $139.9 million, or 64 cents a share, in the year-ago quarter. Excluding items, Garmin said profit increased to 69 cents a share from 59 cents a year ago. Analysts, though, were looking for a profit of 75 cents a share, according to Thomson Financial.
Garmin's revenue for the first quarter jumped 35% to $664 million from the year-ago quarter, but was down 45.6% sequentially and also fell short of Wall Street's target of $705 million. Revenue from North America, Garmin's largest market, surged 27% to $411 million.
The company had previously predicted that first-quarter revenue would be down around 40% because its fourth-quarter results were bolstered by holiday-season sales. Shares of Garmin were dropping $4.97, or 10.7%, to $41.47, a 52-week low. The company's stock has fallen more than 50% in 2008.
"We are pleased with our performance in the first quarter, particularly given the general slowdown in the global economy," said CEO Min Kao. "While the first quarter is typically our slowest quarter, we were nonetheless able to achieve healthy growth in each of our business segments and each geographic area."
Looking ahead, Garmin said that without clear visibility, it would not offer a more specific update to its guidance until later in the quarter. "We recognize that economic conditions will remain a factor on our future growth," CFO Kevin Rauckman said during a conference call. "These goals now include some risk. We will wait until the end of the second quarter to provide an update to our full-year financial expectations."
During its last conference call, the company said that for the full year, it expects earnings per share to top $4.40 and for revenue to exceed $4.5 billion. Analysts currently expect full-year earnings of $4.42 a share on $4.40 billion in revenue.
The personal-navigation device market grew approximately 100% in North America and 40% in Europe, down from 300% and 100%, respectively, in the year-ago first quarter. "The slowing of the PND growth has been well-established," said COO Cliff Pemble, who also spoke on the company's conference call. "We feel we are well-positioned to grow global market share."
Pemble said that other PND makers continue to expect that the average selling price, or ASP, of devices will continue to fall as inventories are cleared out. "We are anticipating further ASP declines of 25% in 2008," Pemble said. Previously, Garmin expected ASPs to decline by 20%. "The good news is that we've achieved significant cost reductions."
Garmin also said its effective tax rate jumped to 19% from 12.6% in 2007 and will remain there through 2008, primarily due to a change in a tax law related to the repatriation of earnings from a Taiwan subsidiary.
Additionally, the company said its forthcoming all-in-one nuvifone handset has generated significant interest from carriers and retailers.
Elsewhere in the sector,
, which is buying digital-map maker
, added 2.7%. Navteq was up 0.4%. Garmin's main competitor, Netherlands-based TomTom, doesn't trade in the U.S.
Among other widely followed tech and gadget stocks,
was rising 4.2%, and
was up 2%.
was higher by 0.1%.