Garmin reported the best quarterly results in its history while PDN rival TomTom posted double-digit sales and profit gains in their respective fiscal fourth quarters.
Garmin had a revenue gain of 99 percent to $1.217 billion for the quarter, ended Dec. 29, 2007, as personal navigation devices (PNDs) became one of the hottest products over the holidays and sales exceeded company expectations.
Net income also skyrocketed to $307.3 million, up from $180.3 million for the period a year earlier, as margins on PNDs remained healthier than expected at 38 percent.
While all of Garmin’s product categories including marine, aviation and fitness increased by at least double digits, automotive/mobile revenue soared 124 percent in the fourth quarter to $999 million.
Garmin said current retail inventory is lean, as sell-through was strong for the fourth quarter.
During a conference call Garmin estimated total sales for the U.S. PND market were approximately 12 million units in 2007 and will increase to 20 million in 2008.
The company would not say how high the U.S. penetration of PNDs could climb but noted that industry estimates range from 25 percent to 50 percent. Currently PNDs have an approximate 8 percent to 10 percent penetration in U.S. cars, according to industry estimates.
Further, Garmin said that GPS phones will not render the PND extinct. Sales of Garmin’s newly announced Nuvifone, to be launched in the third quarter, should represent only 5 percent to 10 percent of sales in the fourth quarter, said Garmin chairman and CEO Dr. Min Kao. “Nuvifone sales for the year are not expected to take away form Garmin PND sales,” added a spokesman. No carrier partners have yet been announced for the much anticipated Nuvifone.
TomTom reported 33 percent gains both in revenue and net profits during its fiscal fourth quarter that ended Dec. 31. Revenue rose to $932.1 million while net profits reached $157.3 million for the quarter.
TomTom said it won a market share in PNDs of 27 percent in the United States for the quarter and 49 percent in Europe, where it is the market leader. It also predicts continued strong growth in the North American and European PND markets .