Garmin Surges in GPS Market

Garmin finds top spot in latest ChangeWave survey

By Jim Woods and Paul Carton

When you're in need of directions, there's no better device than a GPS.

But when it comes to mapping out the winners and losers in the GPS marketplace, we turn to the guidance of our 15,000-member ChangeWave research network. And they've told us that Garmin (GRMN) -- the No. 1 GPS manufacturer in the world -- has nearly achieved domination of the marketplace.

During February we conducted two ChangeWave surveys on global positioning systems – one on consumer GPS trends (n = 3,773) and the other on corporate purchasing trends (n = 2,013). Here's what we found:

Consumer GPS Trends

Our survey of consumers who own a GPS device showed Garmin with a 56% market share -- an increase of four points since the previous survey in January 2008. Garmin's percentage towers over its closest rival, Magellan, which captured only 12%.

Going forward, Garmin remains first on the list in terms of planned consumer purchases of GPS devices for the next 90 days, rising five points to 54%.

---

No one can predict the future, but at ChangeWave Investing we've got the next best thing -- the ChangeWave Alliance. Made up of 15,000 strategically positioned experts, the Alliance can let you in on opportunities and risks months ahead of the crowd! Click here to learn more.

---

Corporate GPS Trends

Turning to our February corporate survey, Garmin continues its reign at the top with a hefty 58% share of the corporate GPS market. That's 11 points higher than the previous corporate buying survey conducted in November 2007.

Magellan also gained some corporate ground since the previous survey, up four points to 12%, while TomTom's numbers have fallen three points since November to 9%.

Going forward, it's more of the same for Garmin, as it dominates planned corporate GPS purchases for the second quarter. We asked corporate buyers which GPS manufacturer their company planned on buying from, and 56% said Garmin. That's a 10-point jump since November.

1  |  2

next >>

'Best Quarter in Our History'

Garmin's February 20th quarterly earnings call has confirmed our ChangeWave survey findings, with the company stating flat out that it was the "best quarter in our history."

Garmin reported earnings per share of $1.39, on sales of more than $1.2 billion – a 99% increase from a year earlier, with profits up an impressive 70%. Analysts had projected earnings of just $1.12 per share. To top it off, the company stated that its outlook for the rest of 2008 remained strong.

So with all that good news, you might wonder why Garmin's share price took a big 20% hit in the weeks immediately following their quarterly earnings announcement. Or why Garmin's stock price is now down nearly 60% from its 52-week high.

According to Wall Street analysts, the combination of significantly lower profit margins for Garmin (down more than 15%) and a retrenchment in U.S. consumer spending has undermined Garmin's stock price. In addition, Garmin's average unit selling price dropped precipitously last quarter, and their CFO recently predicted it will drop another 20% in 2008.

Another factor is the continued slowdown in U.S. consumer spending. Our February survey found an astonishing two-in-five U.S. respondents (39%) saying they'll spend less over the next 90 days than they did a year ago – 5-pts worse than our January 2008 survey.

The decline in spending is occurring across all income levels. But most ominously – not only for Garmin but for the entire GPS devices industry – the survey showed consumer electronics spending in the midst of a major slowdown.

To put this in perspective, it's the weakest outlook for electronics spending ever recorded in a ChangeWave survey.

Given such a slowdown, it's understandable why Garmin and so many other high flying electronics stocks have had an extremely rough go of it lately. But despite shrinking profit margins and an extremely tough consumer spending environment, our latest ChangeWave surveys show Garmin is gobbling up share in the high growth GPS market.

The verdict is out on whether Garmin can return to its previously lofty heights – but it's a company investors should be watching closely.

---

Let the ChangeWave Alliance take some of the guesswork out of investing and help you grow rich. Click here to make sure you're riding the next wave to amazing profits!

---

Paul Carton is the Research Director of the ChangeWave Alliance. Jim Woods is ChangeWave's Senior Editor. The Alliance is a network of 15,000 highly-qualified business, technology and medical professionals in leading companies of select industries. The Alliance is surveyed weekly on a wide range of business and investment research and intelligence topics.

<< previous

1  |   2