Garmin Ltd. (Nasdaq: GRMN): Stock of the Day

by Katharine Schildt, Assistant Editor, The Oxford Club

Navigation devices have become increasingly popular over the years, and the leader in the United States is Garmin Ltd. (Nasdaq: GRMN).

Shares of Garmin Ltd., headquartered in Olathe, KS, soared 17% this morning from Friday’s close, giving hope to a company that has been struggling over past few months.

Its biggest issue recently has been inventory, but it was able to reduce that by $274 million in the quarter.

“It’s a sign that they may not have to price as aggressively to move the inventory in a slower economic environment,” John Bright said, analyst for Avondale Partners LLC.

Despite poor fourth-quarter results, analysts are focusing on the past year and the coming months. Garmin’s total unit shipments increased, up 15%, sales rose 10% to $3.49 billion and its outdoor and fitness sales are up 26%.

Marketwatch reported, “CEO Min Kao said Garmin experienced ‘a challenging economic environment’ but inventory reductions and Garmin’s margins for the quarter helped the company’s unit-sales increase and keep business relatively stable.”

“We continue to experience unit growth in both the North American and Asia-Pacific regions in the fourth quarter and were pleased with our market-share gains around the globe,” Kao said.

“We recognize that 2009 is going to be a difficult year and we are prepared to manage our business accordingly. While economic conditions are very challenging and are affecting most of our markets, we continue to see opportunities to invest selectively and grow our business through new product development and market share gains.”

It is also “evaluating adjustments” in order to “increase cost efficiency and match operations to market demand over the near to immediate term.”

Garmin is launching its first navigation-centric cell phones (the G60 and the M20) in select markets during the first half of this year.

Analysts seemed to have been waiting to pass judgment on this company, but with new products on the horizon, and an obvious demand for its products, Garmin’s future is looking much brighter.

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