| When you're in need of directions, there's no | | | | 70%. Analysts had projected earnings of just |
| better device than a GPS. But when it comes | | | | $1.12 per share. To top it off, the company |
| to mapping out winners and losers in the GPS | | | | stated that its outlook for the rest of 2008 |
| devices marketplace, we turn to the guidance | | | | remained strong. So with all that good news, |
| of our 15,000-member ChangeWave research | | | | you might wonder why Garmin's share price |
| network. And what they've told us is that | | | | took a big 20% hit in the weeks immediately |
| Garmin (GRMN) - the top GPS manufacturer in | | | | following their quarterly earnings |
| the world - has achieved near total | | | | announcement. Or why Garmin's stock price is |
| domination of the U.S. marketplace. During | | | | now down nearly 60% from its 52-week high. |
| February we conducted two ChangeWave surveys | | | | According to Wall Street analysts, the |
| on global positioning systems - one on | | | | combination of significantly lower profit |
| consumer GPS trends (n = 3,773) and the other | | | | margins for Garmin (down more than 15%) and a |
| on corporate purchasing trends (n = 2,013). | | | | retrenchment in U.S. consumer spending has |
| Here's what we found: Consumer GPS Trends Our | | | | undermined Garmin's stock price. In addition, |
| February 18-25 survey of consumers who own a | | | | Garmin's average unit selling price dropped |
| GPS navigation device, shows Garmin with a | | | | precipitously last quarter, and their CFO |
| 56% market share - an increase of 4 | | | | recently predicted it will drop another 20% |
| percentage points since the previous survey | | | | in 2008. Another factor is the continued |
| in January 2008. Garmin's percentage towers | | | | slowdown in U.S. consumer spending. Our |
| over its closest rival Magellan, which | | | | February survey found an astonishing |
| captured only 12%. Looking at the next 90 | | | | two-in-five U.S. respondents (39%) saying |
| days, Garmin (54%; up 5-pts) remains first on | | | | they'll spend less over the next 90 days than |
| the map in terms of planned consumer | | | | they did a year ago - 5-pts worse than our |
| purchases of GPS navigation devices. TomTom | | | | January 2008 survey. The decline in spending |
| is second with 8% (down 1-pt), and Magellan | | | | is occurring across all income levels. But |
| has fallen to third place with just 4% (down | | | | most ominously - not only for Garmin but for |
| 2-pts). Corporate GPS Trends In our February | | | | the entire GPS devices industry - the survey |
| 11-15 corporate buying survey, Garmin is also | | | | showed consumer electronics spending in the |
| the dominant leader with a hefty 58% share of | | | | midst of a major slowdown. To put this in |
| the corporate GPS market. That's a full | | | | perspective, it's the weakest outlook for |
| 11-pts higher than the previous corporate | | | | electronics spending ever recorded in a |
| buying survey in November 2007. Magellan also | | | | ChangeWave survey. Given such a slowdown, |
| gained some corporate ground since the | | | | it's understandable why Garmin and so many |
| previous survey (12%; up 4-pts), even as | | | | other high flying electronics stocks have had |
| TomTom's numbers have fallen to 9%, down | | | | an extremely rough go of it lately. But |
| 3-pts since November. Going forward it's more | | | | despite shrinking profit margins and an |
| of the same, as Garmin is dominating planned | | | | extremely tough consumer spending |
| corporate GPS purchases for the 2nd Quarter | | | | environment, our latest ChangeWave surveys |
| with a 56% market share That's a huge 10-pt | | | | show Garmin is gobbling up share in the high |
| jump since November. Magellan takes second | | | | growth GPS market. The verdict is out on |
| with 10% (up 2-pts), while TomTom limps in at | | | | whether Garmin can return to its previously |
| 5% (down 7-pts). Best Quarter in History? Now | | | | lofty heights - but it's a company investors |
| Wait a Minute. Garmin's February 20th | | | | should be watching closely. |
| quarterly earnings call has confirmed our | | | | |
| ChangeWave survey findings, with the company | | | | The ChangeWave expert research network is |
| stating flat out that it was the "best | | | | composed of 15,000 highly qualified |
| quarter in our history." Garmin reported | | | | professionals. Members are surveyed weekly on |
| earnings per share of $1.39, on sales of more | | | | a range of topics, and ChangeWave converts |
| than $1.2 billion - a 99% increase from a | | | | the findings into proprietary reports. |
| year earlier, with profits up an impressive | | | | |