Garmin has Big Earnings Increase – More New Models ahead

The last quarter has been good to GPS providers, with TomTom and the GPS chipset provider SiRF reporting big earnings increases. Garmin has reported some very nice earnings increases in their sales and profit. Total Sales were $319 million up 45% over year ago. This was promarily driven by the consumer segment sales growth of 50% to $260 million. Profits were up 82%.

Garmin has had a great run in 2005 with 55 new or upgraded GPS units introduced into the market. It is no surprise that they are growing quickly and topping out their manufacturing in Taiwan during the fourth quarter with round the clock shifts to meet demand. Things are going so well, they bought more manufacturing capacity in Taiwan during January.

Garmin had solid growth in all areas, no matter how you slice it. GPS units are hot, we know it, you know it and the markets are showing it. In looking back, Garmin commented on the success of their C-series, i-series StreetPilots, their commanding ownership of the Sports Fitness GPS unit category – a category that they arguably created for the GPS market, their marine and aviation markets too.

Dr. Min Kao, Chairman and Chief Executive Officer says, “2005 was another remarkable year for Garmin. We are delighted to have introduced a record number (55) of innovative new products. These products, which include many automotive, recreational, fitness, and marine products, have been well received by the market. We also look forward to our customers’ reactions to the many recently announced products scheduled for retail delivery in early 2006.

Garmin’s New GPS Units for 2006
Garmin has already introduced a lot of newly updated units at the CES in January, (See our article on the Upgraded X-series products that use the SiRF star III chipset) and appear poised to continue their run of new products. They expect continued growth in the fitness segment due to the new Forerunner 205 and Forerunner 305 (see announcement), as well as the launch of their Edge 205 and Edge 305 units for biking use (see announcement). They expect “new outdoor products with high sensitivity GPS receivers and pre-programmed mapping data cards will drive additional growth in this segment during 2006,” which should be exciting to watch. There was a recent introduction by NavMan (see article) of sports units for water use (kayaking, etc.) and for skiing use, we’d like to see some units with features specifically designed for these uses out of Garmin. This may be an adaptation of the Forerunner platform with specific features that allow for accurate reporting of data important to these sports. Overall, think outdoor fitness that covers lots of distance where time, other performance metrics can be measured (i.e. heart rate) and where distance and terrain covered is interesting.

Remember “high sensitivity GPS receivers” are code words for SiRF star III receivers at this point. Sounds great – the increased battery life in the etrex handhelds is amazing – approximately a 50% increase in battery life with the new SiRF star III chipsets. We like improvements like this here at the GPS Lodge, and it makes it increasingly easier to bring handheld GPS units into the field without having to worry about batteries running out and without carrying several pounds of “AA” batteries to feed these little GPS units.

Garmin is also mentioning that they will be introducing about 50 new models this year on top of what they have already launched; hang on it looks like another great GPS year! We expect more innovations in the Mobile segment, with extensions of the popular c-series and i-series lines, with potential additional features as they strive to keep these relevant in an increasingly competitive market. Features will continue to roll downhill from high end to low end as we see more and more features common on higher end products, land in the lower end products. These are easy upgrades that keep the models at the top of the heap.

As for the higher end of the line, just ask what can you do with a big huge hard drive, a big screen, and the right software. That’s what could be coming along considering the launch of the Garmin StreetPilot 7200. Want to take movies and the whole jukebox of MP3’s with you? Why not? Can I sync it to my Tivo and take the StreetPilot 7200 on the road in my RV (if I had one), so I can either watch movies or bring along my recorded shows?

Garmin will also keep the pressure up in Europe where they plan on increased advertising and presence. This will put it in a pitched battle with strong brands such as TomTom there where GPS units have higher usage and penetration. This should effect their margins in Europe where the costs of this attack on the European markets will be a tough battle.

February 25, 2006

Garmin has Big Earnings Increase – More New Models ahead