Garmin Ltd slashed its profit and revenue forecasts for 2008, hurt by slower growth in the personal navigation devices (PND) market, and delayed the launch of its smartphone, sending its shares down 13 percent.


It also reported weak second-quarter results.

The biggest U.S. maker of navigation devices admitted that the PND market, which it dominates with Dutch rival TomTom , has not been growing as fast as it expected and said consumers were being more cost-conscious than ever.

The outlook cut is the culmination of a tough year for Garmin, as macroeconomic woes, intense competition and several new entrants have weighed on its margins. The stock has more than halved in the last 52 weeks.

For 2008, Garmin sees earnings of $4.13 a share, before items, on revenue of $3.9 billion. It previously expected profit to exceed $4.40 a share on revenue of more than $4.5 billion.

Analysts were expecting earnings of $4.03, before items, on revenue of $4.13 billion, according to Reuters Estimates.

The company expects operating margins to be about 25 percent for the full year.

PND margins are expected to fall further during the second half of 2008, but not as significant as earlier expected due to a better-than-expected pricing environment, Garmin said.

The company has also further delayed the launch of its smartphone, called nuvifone, to the first half of 2009, saying meeting some of the carrier specific requirements will take longer than anticipated.

The company has now pushed back the launch twice. Its initial plan was to launch the nuvifone in the third quarter.

WEAK Q2

Quarterly profit was $256.1 million, or $1.19 a share, compared with $214.4 million, or 98 cents a share, a year ago.

Excluding items, it earned 92 cents a share for the second quarter, missing analysts' average estimate of $1.01 a share, according to Reuters Estimates.

Net sales rose 23 percent to $911.7 million, but came below analysts' expectation of $955.6 million.

It recorded a favorable foreign currency translation of $21.6 million during the latest quarter, as opposed to a loss of $6.1 million a year ago.

Gross margin for the overall business was at 45.8 percent.

Garmin stock was down $6.01 at $39.05 in early trade, making it one of the top 10 percentage losers on Nasdaq.

TomTom was trading down more than 3 percent at 14.89 euros on the Amsterdam exchange.

(Reporting by Purwa Naveen Raman in Bangalore; Editing by Himani Sarkar)
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