Garmin Stays a Market Leader

Garmin (GRMN) is an OEM [original equipment manufacturer] of GPS-based equipment. December quarter results exceeded the consensus on both the top and bottom lines. All segments were up double-digits in 2007, and are expected to be up double-digits again in 2008.

The exponential growth the company experienced over the last two years was driven by low-ASP [average selling price], low-margin PNDs [personal navigation devices]. These products will further impact margins in 2008. We see increasing revenue and gradually decreasing profitability for the company.

However, being a market leader, the company should fare better than most of the other smaller players. Consequently, we view the declining share price as an opportunity to accumulate shares. We reiterate our BUY recommendation. Garmin has a solid product pipeline, and its new product development strategy has enabled it to protect and grow market share in both North America and Europe. All segments except auto/mobile grew double-digits in 2007, and management expects another strong year in 2008.

Sejuti Banerjea contributed to this report.

Read the full analyst report on GRMN.

Read the full analyst report on GRMN