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Garmin Net Income Up Slightly

4/30/2008 10:43:00 AM Eastern

Cayman Islands — Garmin said the economy may be impacting sales of personal navigation devices (PNDs) and it expects average selling prices to decline 25 percent this year.

On an earnings call today, Garmin president and COO Cliff Pemble said, “We see that customers are becoming increasingly sensitive to price,” claiming Garmin believes this is due to the economy.

The company saw a decline in PND average selling prices of 35 percent in the first quarter and noted, “While some predict pricing will stabilize, we’re anticipating further [average selling price] declines of approximately 25 percent in 2008,”according to Pemble. The company is also seeing “signs of weak economics in the second quarter” due to higher fuel prices and other factors.

Garmin said low-end PNDs ($300 and less) account for 80 percent of total unit sales and for 70 percent of revenues. Kevin Rauckman, chief financial officer, said these figures are “up significantly” from the first quarter last year when the low end accounted for about 50 percent of sales.

Garmin’s average selling price is now about $238.

Garmin further noted that it expects to maintain its market share in the United States, which varies from 40 to 50 percent on a monthly basis according to NPD. Garmin also plans to offset some of this year’s ASP declines with an expected 20 percent drop in costs of raw materials.

Unit sales of Garmin PNDs were up over 100 percent in the first quarter.

The company said it pushed back the launch of its Nuvifone later this year from late third quarter to early fourth quarter and that it is currently showing the product to carriers and key retailers.

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