(By Tim) Global positioning systems, or GPS, manufacturer Garmin Ltd. (NASDAQ: GRMN) with release the company's first quarter of 2010 earnings report on May 5 before the market opens. A conference call to discuss the results will be held at 10:30 AM eastern time the same day.
Garmin International is designs, manufactures, and markets navigation and communications equipment for a variety of markets, including aviation, marine, automotive, cellular, OEM, and general recreation. Specifically, the company aims to enrich the lives of customers, suppliers, distributors, and employees by providing the very best products that offer superior quality, safety, and operational features at affordable prices.
The consensus estimate has Garmin earning 41¢ per share for the quarter on revenues of $483.5 million. For the same quarter of 2009 the company had a net of 25¢ on sales of $436.7 million. There is a pretty wide spread in the estimates of the 19 analysts that follow Garmin. Earning per share estimates range from 29¢ to 49¢ and the revenue projections run from $437 million to $546 million.
One year ago, Garmin had a serious miss for the 1st quarter earnings. The consensus was 41¢ per share and the company reported only 25¢. For the rest of 2009, the earnings were significantly above the estimates, beating the consensus by about 50% for each of the three quarters. In the fourth quarter of 2009, Garmin earned $1.43 per share, well above the consensus of 95¢.
In March the Board of Directors approved a one-time doubling of the annual dividend to $1.50 per share. The press release noted that the dividend reflected the strong cash position of the company and expected ongoing cash flow. The $1.50 was paid to shareholders of record on April 15. The board also announced the company's plan to move its incorporation location from Grand Cayman to Switzerland. Increased European business and acquisitions were the catalyst for the move.
Garmin is the world leader in personal navigation devices or GPS devices. In 2009 the company had a 60% market share in the U.S. and 20% in Europe. In 2009, worldwide revenue declined by 16% but the company eked out a one-percent in net earnings per share with a 4.5% increase in gross margin to 49%.
European competitor Tom Tom recently reported a first quarter profit in contrast to a loss one year earlier. The company noted a decline in the sales of hardware units and an increase in the sales of content and services. Garmin is more focused on the hardware side. The company sells products for the automotive market, health and fitness sector, aviation and marine markets. The company has also been participating in the increased availability of GPS function in smart phones by teaming with ASUSTeK Computer to offer a GPS enabled Android smart phone.
Some pundits think Garmin's profitable days are numbered as the world replaces dedicated GPS devices with navigation enabled smart phones. The other side of the Garmin story is recent conjecture that Garmin may be one target in a new wave of leveraged buyouts. The company does have significant cash flow to pay for a LBO. Garmin had record 4th quarter financial results. It will be interesting to see how they fared in the historically slow first quarter.
