Sunday, March 18, 2012

Garmin Second Quarter Report Overview

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Garmin released their second quarter financial report Wednesday morning before stocks opened. Overall, the report was still in the positive although the company’s shares fell as much as 7 percent in morning trading after the report was released. Garmin reported a total revenue of $778 million dollars this quarter and acknowledged the completed acquisition of Fusion Electronics to aid with their marine products. If you want to read the full report for yourself, you can download it here, but these are the parts I found most interesting:

  • Garmin’s outdoor segment marked a decline yet again, despite the introduction of their Approach S6 Golf GPS watch line. This is the second time in five quarters that the company saw a decline in this section. The reason stated was the cool reception of their VIRB Elite action cameras versus the cost of advertising.
  • Their fitness line of products showed a healthy overall growth, and was probably the most changed of their markets. Several biking and running products including the Garmin Edge 1000 were introduced or upgraded this quarter which probably accounts for some of the growth.
  • Garmin’s aviation department showed a growth of 11%, and the company stated they intend to continue to focus their efforts to gaining more certifications to expand their product lines to more crafts. There were some hints of new products coming out, but not much more information.
  • Automotive PND devices declined yet again, but according to the release “performed better than expected” with a 2% growth–an implied positive number only because of previously deferred revenue and OEM sales. Garmin did state that they “remain cautious regarding the industry and will continue to focus on share gains and profitability.”

Garmin also stated they intend to do some restructuring of the company’s Taiwan subsidiary company.

Despite losses in PND and Outdoor, Garmin overall has posted a positive growth and has raised their full-year pro-forma earnings forecast and their revenue forecast.  In a statement, the CEO of Garmin said:

“We are excited to see the positive consumer reception for many of our recently introduced products and are maintaining our focus on innovation and diversification to drive further growth opportunities.”

So, while it’s looking pretty grim for the outdoor products like their VIRB camera series, Garmin is apparently doing pretty well and intends to continue to expand their business past the dedicated PND systems.

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