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PND Sell-Through, ASPs Picked Up In Q1: Garmin

Cayman Islands –
Excess retail-channel inventory caused U.S. and worldwide sell-in of portable
navigation devices (PNDs) to drop in the first quarter ending March 27, but
sell-through by major U.S. retailers posted year-over-year growth during the
quarter, Garmin said in releasing its

financial report


average selling prices (ASPs) rose in North America
in the first quarter after a fourth-quarter decline, the company added.

For the full year,
Garmin stood by its forecast that its 2010 worldwide PND sales will be flat in
units and that its ASPs worldwide will drop by 5 percent to 10 percent. In North America, however, the company expects its unit
sales to grow in the high-single- or low-double-digit percentage rates. Garmin
also expects industrywide PND unit growth in North America
for the full year.

In other comments,
Garmin executives said 80 percent of its PND unit sales worldwide are
value-priced models and that 20 percent to 30 percent of its unit sales are
replacement sales.

  In a written statement, Garmin chairman/CEO
Min Kao said Garmin’s inventory levels at retail “normalized toward the end of
the first quarter,” and as a result, “sell-in to the retail channel has begun
to more closely align to sell-through trends in the second quarter.” A
spokesman added that Kao’s comments apply to the PND industry as a whole, not
just to Garmin’s PND sales.

  Garmin’s sales in its mobile segment “will
improve sequentially throughout the remainder of 2010,” Kao noted. The majority
of Garmin’s mobile-segment revenues come from PNDs, but the segment also
includes the company’s Nuviphone PND-equipped cellphones and sales of its GPS
technology for use in third-party aftermarket and OEM in-dash navigation
systems. In the first quarter, the mobile segment accounted for 51 percent of
company sales, down from a year-ago 59 percent, with the remainder coming from
outdoor/fitness, marine and aviation products. Mobile accounted for 20 percent
of the company’s operating income.

 For the quarter, worldwide Garmin net sales
fell 1.3 percent to $431 million, and net income fell 27 percent to $37.3
million according to GAAP accounting standards, excluding the impact of
currency fluctuations. With a foreign-currency gain of an additional $38.2
million, pro forma net income grew 49.4 percent to $75.5 million, the company