GPS device maker Garmin cuts outlook, amid disappointing Q2 earnings report
Digital navigation maker Garmin (NASDAQ:GRMN) reported a decrease in second-quarter revenue as portable devices in North America shrank, prompting the company to revise its outlook.
Garmin fell as much as 3.11% to $30.55 in Nasdaq Stock Market trading on Tuesday.
Total revenue fell 8% to $674 million in the second-quarter that ended June 25. That compares with $728 million one year earlier.
Net income for the latest quarter was $109.4 million, or 56 cents per share, down from $134.8 million, or 67 cents per share, in the year ago period.
Analysts, on average, had expected earnings of 67 cents on revenue of $635 million, according to Bloomberg.
Gross margin declined to 48% down from 54% last year.
"Margins fell short driven by increased deferral of high margin revenues associated with bundled product offerings and increased operating costs due to bad debt and legal expenses," Chief Executive Min Kao said in a statement.
Geographically, sales in Europe rose 12% to $253 million, up from $226 million. Asia posted sales of $63 million, a 31% growth, compared to $48 million a year ago.
Revenue in North America dropped 21% to $358 million, down from $455 million.
The company sold 3.8 million units in the quarter, down 6%. However, the company recorded unit growth in both Europe and Asia.
Garmin, which competes against Amsterdam-based TomTom NV (AMS:TOM2), reported its automotive and mobile segments fell 19% to $363 million.
The company attributes the drop to "significant" volume declines of portable navigation devices in North America overwhelmed growth in installations of in-vehicle systems, Garmin said.
Going forward, Garmin expects full-year adjusted earnings of $2 to $2.15 per share, on sales of $2.5 billion to $2.6 billion.
Analysts, on average, are expecting the GPS device maker to report earnings of $2.45 per share, before items, on revenue of $2.5 billion, according to Thomson Reuters.
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