Garmin Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and Garmin (GRMN -0.25%) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Garmin has gone from being the giant in the GPS industry to facing extinction, as just about every smartphone now offers GPS services. Can the company survive by attacking niche markets? Let's take an early look at what's been happening with Garmin over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Garmin

Source: Yahoo! Finance.

Will Garmin finally find itself this quarter?
Analysts have been a bit conservative about Garmin's prospects for the quarter, pulling back on earnings-per-share estimates by $0.03 in the past three months. Yet the stock has done quite a bit better, rising 9% since mid-November after approaching new lows for the year.

Garmin has allowed itself to be hemmed in on all sides, and it is struggling to figure out how to get out of the box it's in now. What used to be its strength is now in real danger of becoming an obsolete piece of extra equipment, as standalone GPS navigation devices in cars have become unnecessary for most of those who have smartphones with turn-by-turn navigation apps. Rival TeleNav (TNAV) has grown substantially by working with wireless carriers to offer navigation and more recently with its own apps.

As a result, Garmin has looked for high-end niche uses, with a recent new release in aviation navigation and with similar devices for marine use. Yet Trimble Navigation (TRMB -1.08%) is keeping Garmin from dominating that segment with its own specialty products. Even in the fitness arena, Nike's (NKE 0.95%) Nike+ watch offers GPS services powered by TomTom, challenging Garmin's sports-oriented products.

In Garmin's earnings report, watch for how the company plans to move forward given all the competition it's facing. Unless Garmin can find a path back toward greater relevance, the GPS giant might well find itself lost forever on a slow road to nowhere.

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