BANGALORE, Feb 23 (Reuters) - Navigation device maker Garmin posted lower-than-expected quarterly results as sales of its gadgets used in cars dropped, but shares rose 15 percent as the company reduced its inventory.
The top U.S. navigation device maker, which has been facing inventory issues, said it reduced its inventory by $274 million in the quarter. In October, it had expected to lower inventory levels by about $150 million by the end of the year.
It's a sign that they may not have to price as aggressively to move the inventory in a slower economic environment, Avondale Partners LLC analyst John Bright said.
Garmin, which gained market share in Europe, said it continued to see unit growth in both North American and Asia-Pacific regions, even as market for personal navigation devices slowed.
The company, which was earlier scheduled to report its earnings on Wednesday, said it sold 6.4 million units in the fourth quarter of 2008, up 15 percent from a year earlier.
In general their quarter was good enough, but their future remains very cloudy, Deutsche Bank analyst Jonathan Goldberg told Reuters.
Garmin said it would not provide an outlook for 2009 due to lack of visibility even as Dutch rival TomTom (TOM2.AS) recently cut its 2008 outlook as portable navigation devices, one of the fastest-growing consumer-electronics categories in recent years, see weakening growth.
Garmin's fourth-quarter net income fell to 78 cents a share, from $1.39 a share a year earlier. Excluding items, earnings of 93 cents a share were below analysts' average estimate of 96 cents a share.
Revenue fell 14 percent to $1.05 billion. Analysts were looking for $1.12 billion. Revenue from the company's automotive/mobile segment declined 17 percent to $828 million. [ID:nWNAB5451]
Gross margin was at 41.1 percent, a 320 basis point decline sequentially, mainly due to a decline in the average selling price during the holiday season.
Garmin said it would launch its first navigation-centric mobile phones, the G60 and the M20, in selected markets during the first half of 2009.
Earlier this month, the company had dropped plans to enter the cellphone market on its own, and teamed up with Taiwan's low-cost PC maker Asustek (2357.TW) to sell phones under the nuevifone brand.
Last week, the two phones were unveiled in the Mobile World Congress in Barcelona, the industry's biggest annual gathering.
While its (G60) design feels outdated, the software was superior to the majority of touch phones displayed at the show, Oppenheimer & Co analyst Yair Reiner said in a preview note on the company's earnings.
The G60 runs on open-source Linux software, while the M20 uses Microsoft's (MSFT.O) Windows Mobile software. The company also aims to bring out a phone based on Google's (GOOG.O) Android operating system towards the end of the year. [ID:nLG226967]
Shares of Garmin were trading up $2.16 at $17.33 Monday morning on Nasdaq. They have lost more than three-fourths of their value since February last year, when they touched a 52-week high of $64.20. (Additional reporting by S. John Tilak; Editing by Amitha Rajan)