* Disappointed by nuvifone sales
* Sees falling margins in 2010
* Sees weak PND sales in 2010
(Recasts, adds details, share movement)
Feb 24 (Reuters) - No. 1 U.S. navigation device maker Garmin (GRMN.O) posted quarterly results that topped Wall Street expectations as it sold more units, but warned that falling prices and increased competition could hurt margins in 2010.
The company’s shares rose about 3 percent in volatile pre-market trading on better-than-expected results.
The personal navigation market — once a duopoly of Garmin and Dutch rival TomTom (TOM2.AS) — has become increasingly crowded, with Google (GOOG.O) and Nokia NOK1V.HE joining the fray by offering free navigation software. For the fourth quarter, the company posted earnings of $1.43 cents a share, excluding items, beating analysts’ expectations of 95 cents a share, according to Thomson Reuters I/B/E/S. [ID:nWNAB1042].
Gross margins for the period rose by more than 4 percentage points to 46 percent as price declines slowed. Revenue from its biggest segment - automotive/mobile - fell 2 percent to $812 million.
The company said it was disappointed by the sales of the nuvifone, a GPS-based smartphone it launched last year pitting itself against the likes of Apple’s (AAPL.O) iPhone and Research in Motion’s RIM.TO BlackBerry.
For 2010, Garmin expects earnings of $2.75 to $3.15, excluding items. Analysts were expecting a profit of $2.69 a share. It forecast overall revenue growth of up to 5 percent for 2010, topping Street expectations.
The company projected flat to slightly declining revenue for the personal navigation device category in 2010 and said its overall 2010 growth would be primarily fuelled by its other segments.
However, it expects both gross and operating margins to decline this year.
“The margin declines will be primarily driven by an ongoing price decline of approximately 10 percent in the PND industry and increasing R&D investment across our segments,” the company said.
Last week, TomTom posted healthy quarterly results as it sought to downplay the threat of competition from free software on mobile phones. [ID:nLDE61G1ZN]
Shares of the Cayman Islands-based company were trading at $34.97 in pre-market trade. They had closed at $35.17 Tuesday on Nasdaq. (Reporting by Sayantani Ghosh in Bangalore; Editing by Saumyadeb Chakrabarty)