Worldwide PND Sell-Through Off 5-10% In Q3: Garmin

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Schaffhausen, Switzerland - Worldwide portable navigation device (PND) sell-through declined 5 percent to 10 percent in units during the third quarter and will probably fall again at similar rates in the fourth quarter, given market saturation and "substitute solutions" such as GPS-equipped smartphones, Garmin president/COO Clifton Pemble said during an analysts' conference call.

 About 30 percent of PND sales worldwide are replacement sales, he noted in citing market maturity.

  The company, which leads in U.S. PND market share, suffered a 19 percent third-quarter decline in its automotive/mobile segment sales to $442 million, consisting mainly of PND sales. The segment's year-to-date sales fell 11 percent to $1.11 billion. The segment's unit volume and average selling prices (ASPs) also declined during the third quarter, said Pemble, who described the ASP declines as "significant."

 The automotive/mobile segment consists mainly of PND sales but also includes sales of PND-equipped cellphones, which have been discontinued, and sales of GPS technology for use in third-party aftermarket and OEM in-dash navigation systems. OEM segment revenues rose at triple-digit rates during the quarter, Pemble noted. Sales of the company's PND-cellphones came to only about $25 million worldwide since their launch last year.

 Despite the sales decline in the automotive/mobile segment, the segment continued to post operating income, though it fell 58 percent to $66.6 million for the quarter and 36.6 percent for the year-to-date to $172 million.

 The company's other product segments include aviation, marine and outdoor fitness products, and sales of all company segments combined fell in the third quarter by 11 percent to $692 million and, for the year to date, by 2 percent to $1.85 billion. Companywide operating income slipped for the quarter and year-to-date, but net income rose during both periods.

 In other comments during the conference call, Pemble said Garmin left the PND phone market because "the smartphone market exploded ... beyond expectations."


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