Garmin dropped some good news and some not so good news this week. The Good news was that their earnings are still up despite the poor economy, and lackluster sales on a whole range of things at the stores these days. The bad news is that lowered expectations for the year citing macroeconomic issues.
The big winners were in a few segments:
Auto Revenue - up 24%
Outdoor/Fitness Revenue up 54% on the back of a successful Forerunner 405 and Edge 605/705 launch
North American Revenue up 27%
European Revenue up 19%
From CEO Min Kao:
"Despite the challenging macro economic conditions, Garmin experienced another quarter of growth in 2008 and continues to demonstrate our solid leadership position in the industry. Our strength in the automotive/mobile segment in the face of a slowing economy demonstrated that our products continue to be well-positioned to take advantage of the ongoing demand for portable navigation devices. The latest nüvi 2x5 products delivered during the second quarter provide yet more features for cost-conscious consumers including picture navigation and compatibility with MSN Direct's real time content service. We also delivered the high-end nüvi 800 series in the second quarter which offers industry-leading speech recognition in the personal navigation sector. Our nüvi product offerings continue to support our strategy of extensive market segmentation, drawing in customers with compelling, competitive features, and useful content integrated into easy-to-use products at many attractive price points. We believe this approach will continue to garner growing market share and drive strong results throughout the remainder of 2008. Although we continue to earn industry-leading market share, the sector is not growing as rapidly as earlier anticipated and consumers appear to be more cost-conscious than ever; therefore, we will be lowering our full year revenue growth expectations."
Full Press Release can be found here at the Garmin Site
These are some crazy times; Garmin's earnings were up against last year, but not up enough for the stock market to feel comfortable, and as a result, Garmin's stock lost a few bucks after teh earnings announcement. To be clear, the earnings were the best Garmin ever had, and sales are up 35% overall, with 43% increase in automotive sales, 30% in Marine sales, 19% increase in Aviation sales, and a 16% increase in Fitness/Outdoor sales. Garmin also cited their strategy of distributor acquisition in Europe as a main reason for gaining sales there.
The problems come when Wall Street expected more from them, and from the fact that operating margins shrank, meaning that prices are shrinking faster than costs versus a year ago.
CEO Min Kao said
"We are pleased with our performance in the first quarter, particularly given the general slowdown in the global economy. Demand for our automotive/mobile products continued beyond the traditionally strong fourth quarter holiday season, with another quarter of robust triple-digit growth. 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."
TomTom reported earnings for the first quarter of 2008, and it was not as good a quarter this year due to significant price pressure on the well known GPS maker. So, apparently TomTom didn't grow revenue this past quarter like they have in the past. Tough competition and the tough economy has to be impacting sales of consumer electronics like this, with discretionary spending under pressure. I guess if you can't afford a tank of gas, let alone a new widescreen GPS.
Overall revenue was 264M Euros vs. 296M Euros last year, while US revenue was up 133% to 85 Million Euros.
"Retailers in Europe slashed personal navigation device inventory during the first quarter," said Dresdner Kleinwort analyst Ulrich Rathe, "leading to a massive 30% decline in sales in that geography." For the company as a whole, sales fell 10.8% in the first quarter.
TomTom's average retail price was down 42.6% to about $185, from $324 a year earlier. A quick check back in my archives had the TomTom ONE selling for $290 in March 2007, while it is frequently seen for $139 - $149 these days, and the TomTom GO 910 was at $439, while the TomTom GO 920 is selling in the mid-to upper $300's today. The price drops are dramatic, and the effect is that the big guys aren't making as much money, but they are keeping the low cost competition at bay as they are having a tough time achieving critical mass.
GPS World Magazine has a good write-up on the GPS market, its developments and some of the critical numbers coming off the big fourth quarter in 2007 which saw cheap GPS deals at every major Black Friday player, and out of stocks online for days as people scrambled to get one of the hottest gifts of the year. While total year shipments jumped 148%, Q4 shipments jumped over 400%. While that's a lot, and there were 6.7 million sold in Q4, there's still plenty of people without one. A couple of key points below, check out the whole article for more information on the US market and the growth in the Asian Pacific markets as well.
Canalys estimates that around 6.7 million PNDs shipped in the United States in Q4, representing 55 percent of the total for the year. In Q4 2006 the figure was below 1.5 million, showing just how much the market has grown and the extent to which the United States, once tiny compared to the European market for such devices, has become a major arena for the many competitors in this industry, Canalys observed.
Looking at the market for all mobile GPS navigation devices (which includes smart phones that have integrated GPS and an activated on-board solution), Canalys puts market leader Garmin's share in the United States in Q4 at 47 percent, almost exactly where it was a year earlier. Garmin is followed by TomTom at 21 percent Magellan at 17 percent and then Mio Technology at 6 percent -- the top four hardware vendors have more than 90 percent of the market. A year earlier they had 80 percent between them.
TomTom reported earnings and as you would expect out of a GPS maker riding the wave of a surging category the sales were way up; up 123% in unit sales year over year for the quarter, with sales up 33%. Not bad, as they retained a high market share in Europe - 49% in the fourth quarter and achieved a 27% share in the US. All wrapped up in this is a declining average sales price, resulting in a market share push.
While the sales are way up, the investment community got spooked on the reports that margins are getting squeezed as the prices are dropped. With those lower prices, TomTom is expecting to see the GPS market at 38 million units, up from 25 million units in 2007; a 50% growth rate. I'll bet a lot of industries would love to have a 50% growth rate......
They also recently mentioned that hey are having a press conference at CeBit this coming week where they will undoubtedly announce new models.
Garmin's sales for the 4th quarter were up 99% versus year ago to $1.2Billion in the quarter. That's too bad, they were up 100% last year; missed it by that much...... Anyway, earnings were also up 70% to $1.39 per share. Things were up all over the place as sales grew significantly in their Automotive, outdoor/fitness, aviation and marine. Growth was seen in all geographies too.
Wall St hit them a bit after the announcement as the street is a little concerned over the decline in selling prices. I have noticed that Garmin used to carry a premium price over TomTom on many models, but are now undercutting them on some models. It is certainly a more aggressive market out there as people are fighting for their share of the explosive growth. Expect TomTom Earnings out in a few days...
Garmin also mentioned that they expect retail prices to drop by 20% this year; not sure if that means a drop across the board, or average price when you include the new high end units that have yet to hit the market. But to me a 20% drop on a $260 Nuvi 350 means a Nuvi 350 that is around $199 for the holidays.
Dr. Min Kao, Chairman and Chief Executive Officer said, "Garmin experienced an exciting fourth quarter, which brought a strong finish to fiscal 2007. The strong holiday season demand we experienced clearly demonstrated that our products are well-positioned to take advantage of the growing interest in portable navigation devices. Independent market research indicates we have maintained a strong leadership position in North America, and our market position in Europe continues to improve as well."
It appears that SiRF has run into pricing pressure. With prices dropping like a stone on the GPS front, and some GPS makers electing to go with other "High Sensitivity Receivers", that are pretty good in my opinion (think TomTom and Garmin). Anyway, SiRF's profits dropped 89%, and today their stock dropped by over 50%. Not good news.
NAVTEQ announced solid earnings growth related to the strong performance of GPS system growth. Sales were up 51% to $214.8 million, and net earnings were up 47% versus year ago. Big jumps for the map maker that supplies maps to Garmin and others. Recall that Nokia has announced plans to acquire NAVTEQ while Garmin and TomTom appear to be in a bidding war for the smaller and less profitable rival, TeleAtlas.
Garmin announced some impressive earnings on their business, with total sales up 79% and earnings up 59% over year ago. The sales growth was driven primarily by 118% growth in the automobile segment, which now accounts for 71% of total revenues (or about $517Million in the quarter). Sales grew in all regions, 71& in North America, 89% in Europe, and 109% in Asia.
Our retail orders are strong, and we look forward to a solid 2007 holiday season,” said Kevin Rauckman, chief financial officer of Garmin Ltd. Well there you go; hang on for a rocking holiday season at the GPSLodge.
TomTom released earnings this past week and things are looking good again at the GPS maker, as they beat earnings estimates. They sold 83% more units than the same period last year, and as a result, had 21% sales growth, resulting in a profit up 36% over last year. Not bad numbers, and TomTom upped their estimates for number of units sold from 8-9 million this year to 9-10 million units this year. The holiday season is only a few weeks away and has to be a test of how anyone is doing in the GPS market.
TomTom’s Chief Executive Officer, Harold Goddijn said, “TomTom delivered a strong set of results this quarter with record units shipped, record profits and record cash flow in a market that continues to grow rapidly.
Following successful tests of our real time traffic solution in the Netherlands we will launch our new service in November. Discussions with mobile phone operators in other European countries are progressing and we expect to make further announcements shortly.
Ahead of the fourth quarter we have launched important new products, which have been received positively by the market. The amount of customer feedback we have received since the introduction of Map Share™ is also encouraging. We are confident that with our strong product line-up, supported by advertising campaigns and promotional activity TomTom will be able to defend its market position in Europe and to grow market share in the US.”
Meanwhile, Jocelyn Vigreux, President of TomTom USA, and , Nelson Chan CEO of Magellan were elected to the board of the Consumer Electronics Association, or CEA. The CEA is a trade group that works on behalf of the consumer electronics industry to promote and grow business. To me, having two leaders of GPS companies on the board signals the importance of the GPS category in consumer electronics.
TomTom released earnings along with the news of their offer for TeleAtlas, and things were strong for the GPS navigation system maker. Revenue was up 37% over last year to €380 million (~$520 Mil) , driven by their 118% unit growth in navigation devices. Earnings was up 81% over last year, to €68 million (~$91 Mil).
“In the second quarter of 2007, TomTom again delivered good results with strong revenue and strong profitability. We continue to deliver high margins, demonstrating our ability to manage our growth and costs.
These results are underpinned by the quality of our products and services. We continue to provide innovation leadership in the personal navigation category which was once more demonstrated recently by the positive reaction of our partners to the launch of our new GO range and our revolutionary new Map ShareTM technology in early June.
We are especially excited about our second country contract to deliver superior real time traffic services. This will be made available to our customers in the UK in the first half of 2008. The launch of the Dutch service is expected in the second half of 2007.
For the second half of the year, we have a strong product line-up in place and market conditions in both Europe and North America continue to be very positive. We now expect to ship a higher number of PND units and to deliver stronger margins for the full year when compared to our guidance last quarter.
Tele Atlas reported earnings for the first quarter, with revenue up 13% over year ago, and their net loss decreased 22%. Their revenue from GPS units increased 56% over prior year, which shouldn’t be any surprise to GPS Lodge readers. Recall, TomTom and Mio use TeleAtlas maps.
Alain De Taeye, Chief Executive Officer, said: “The personal navigation market continued to perform strongly, especially in North America, in what historically has been our slowest quarter in the year. We launched new services for application developers and content providers that facilitate the delivery of content-rich map-based applications. I am confident that we are on track for yet another good year.”
NAVTEQ released earnings, and things are looking pretty good for the provider of maps to the GPS world (and others too). Sales were up about 30% and net income was up 87% over last year’s first quarter to $30.2 million. Recall that they closed the purchase of Traffic.com in the past quarter.
The business is performing very well and we see positive signs for the remainder of the year,” said Judson Green, President and Chief Executive Officer. “In terms of our key accomplishments, we closed on our acquisition of Traffic.com, secured new business with a number of in-dash and portable customers, and released our first Thailand map, which marked our 60th country of coverage.”
Garmin Earnings - Sales up 53%, Net Earnings up 60%
Garmin released strong earnings numbers today ahead of the market open, but then got its stock hammered as sales were below Wall Street's expectations. So, while they missed some sales expectations, things are still pretty darn good, as revenue was up 53% over year ago, with automotive pulling in the dough, with sales up 110% over year ago.
Looking at the Business highlights, they indicate that they are well positioned after launching the new Nuvi 200 line, have new production capacity to produce up to 8 million units annually, are selling the Nuvi 600/650 widescreens, as well as the MSN Direct models, the SP 580 and the Nuvi 680.
Garmin also reported the sale of 1.5 million units in the first quarter, and for those keeping track, that is a few more than TomTom reported (1.3 million units), although they are only making automotive (motorcycle) units.
New Models
Like we gleaned from the last earnings announcement, we expect new fitness models. "We look forward to new product introductions scheduled for later in the year, and will provide updated progress for the segment as the year progresses and we have better visibility." Hummm, can't wait. Sunlight is a wastin' let's get those new models out while the warmer weather is here.
Garmin Sales and Earnings Up
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