It's wonderful that Garmin's
Plus, while 61% of Garmin's sales may have come from new products, that does raise a key question. What does Garmin's slowing rate of R&D growth as a percent of sales imply for future product launches? When a company's sales are so tethered to innovation that more than half of all sales come from new products, R&D had better keep up. Otherwise, soon it's not just facing a slowdown in sales growth, but a decline in total sales. If that happens, along with Garmin's trend toward lower-margin products, it's a recipe for disaster.
And as for the GPS navigation being built into cell phones, I think they represent a bigger threat than my dueling partner Alyce Lomax believes. If you look at the successful business models of carriers like AT&T
While I'm sure there's some price I'd be willing to pay for a profitable company like Garmin, the modest sell-off thus far this year hasn't been enough to excite the value investor within me. It's worth watching, but I'm not ready to buy yet.
Garmin and Amazon are Stock Advisor picks. AT&T is a former recommendation of that service.