Garmin Moves In The Right Direction

While Garmin's global-positioning gear can pierce the fog to pinpoint your location, the company's financial officers can't see through the murky economic scenario, and the electronics maker said Monday it would not offer guidance for its 2009 results until the clouds clear.

In the current climate, that, combined with a fourth-quarter earnings report that missed estimates by a nickel, wasn't so bad.

People have been fearing the worst, but it wasn't so bad," said Scott Sutherland, an analyst at Wedbush Morgan Securities, "things have been down, but it hasn't been the disaster people have been pricing into the stock."

Investors were so impressed, they pushed Garmin's stock up 9.6%, or $1.46, to $16.63, in midday trading. That's still a far cry from the $120 level near which it peaked in 2007.

The highlight of the the quarter ending Dec. 27 was Garmin's ability to maintain margins, despite its sales falling by a fifth. It recorded a gross margin of 41.1%, down only modestly from 44.3% in the third quarter, and 41.8% in the fourth quarter of 2007.

Times have been tough for Garmin (nasdaq: GRMN - news - people ). Though its car-navigation systems were hot items for the 2007 holiday season, prices fell fast last year as consumers pulled back and spent their electronics dollars on laptops and televisions.

For the quarter, Garmin's sales totaled $1.0 billion, 20.0% below the $1.2 billion reported in the previous year's corresponding period, and just shy of the $1.1 billion Wall Street had forecast.

 

Earnings dropped 48.7%, to $157.7 million, or 78 cents per share, from $307.3 million, or $1.39 per share. Excluding foreign-exchange considerations, earnings only fell 93 cents per share, from $1.31 cents per share. That, however, was below the 98 cents analysts had predicted.

Earlier this month Garmin and Asustek Computer announced they will make phones based on global-positioning satellite technology, which is what powers Garmin's navigation devices