A sputtering economy, implosions at financial institutions, or just plain bad management -- on any given day, investors can name a number of reasons to sell a stock. Yet while panic never benefits investors (unless they're calmly snapping up values while others freak out), it's good practice to play devil's advocate with investments from time to time.
In the case of personal navigation device (PND) maker Garmin (Nasdaq: GRMN ) , a total of 5,279 members in Motley Fool CAPS have weighed in on its chances of success. I've already plucked out some of the bullish rationale backing Garmin today, so here are three counterpoints to consider, courtesy of CAPS:
Competition: While many believe GPS smartphones from makers like Apple (Nasdaq: AAPL ) and Research In Motion (Nasdaq: RIMM ) don't stack up to Garmin's offerings, many still contend that these competitive pressures pack significant punch. Consider that 85 million GPS-enabled smartphones are expected to be sold this year, roughly eight times the number of in-car and portable navigation devices. And Garmin delayed its own GPS-enabled Nuvifone which was set to answer other devices from Nokia (NYSE: NOK ) , Motorola (NYSE: MOT ) , and Palm (Nasdaq: PALM ) .
Slowing Financials: Although Garmin posted a 23% rise in sales for its second quarter, its marine division sales dropped 11% and overall gross margins fell 470 basis points. Without the Nuviphone this year, the company has factored out this revenue and lowered its guidance for 2008 sales and earnings. And some only expect the negative trends to continue.
Weaker Product Pricing: PND prices fell by about 25% in the first half of this year and some expect further drops. And with the Nuvifone releasing in a crowded smart phone market in 2009, pricing pressure is expected from new products like Deutsche Telekom's (NYSE: DT ) T-Mobile G1 phone. With inventory levels high, and pricing cuts continuing, some just want to throw the stock away.
Of course, Garmin has faced serious threats before and overcome them in the past. But the question today is whether or not the company can do so again -- and reward investors. That's why CAPS is such a great resource to augment your own analysis.
To see what the very best CAPS members are saying now about Garmin, just click on over to Motley Fool CAPS and have a look -- it's all free, and even open to your opinion.
More Foolishness:
RSS Headlines
Fool UK