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