Garmin Posts Revenue Increase, Flat Margin

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Schaffhausen, Switzerland - Garmin reported a revenue increase of 9 percent in its second-quarter results, ended June 26.

Total revenue was $729 million, up 9 percent from $669 million in second quarter 2009, with all segments posting growth, according to the company.  

The automotive/mobile segment saw its revenue increase 2 percent to $447 million, while the outdoor/fitness segment increased 32 percent to $143 million. Aviation segment revenue increased 1 percent to $65 million, and marine segment revenue increased 23 percent to $74 million.

Garmin said that units shipped also increased by 8 percent year over year, to 4 million units.

Gross margin was flat at 54 percent, compared with 54 percent in the previous quarter and 53 percent in the prior-year period.

Operating margin dropped 2 percent when compared with the prior year --   28 percent vs. 30 percent. It did improve from 19 percent in first quarter of 2010

Dr. Min Kao, chairman and CEO of Garmin, said in a statement: "The automotive/mobile segment posted growth in the second quarter as OEM and mobile initiatives contributed to the increase. Both pricing and margins in the quarter were on target with our expectations. PND pricing has shown signs of stabilizing, with a decline of only 6 percent year over year, and cost reduction efforts largely offset the declines, resulting in stable year-over-year margins.

"Late in the quarter, we began delivery of the 3700 series of Nuvis and are excited by the initial reception from both our customers and consumers. In the quarter, we also launched the Garminfone A50 with T-Mobile and the Nüvifone A10 with Optus in Australia. Sales of our smartphone product category contributed $27 million in revenue during the quarter. While this was below our plan, we are working aggressively with T-Mobile and other carriers around the globe on the appropriate positioning and pricing of our devices in the competitive smartphone space."


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