Kiss of Death: CIBC's Garmin Call

CIBC is out with a very interesting call on Garmin (GRMN) saying that while their checks show the company is likely to report very solid Q407 results, steep ASP declines and softening growth in Europe could dampen the possibility of a blowout. The same factors are also making the firm slightly more cautious about 2008.

They are raising their 4Q GRMN PND unit estimate to 4.3 million from 4.1 million, to reflect extremely strong U.S. demand. But they also believe ASPs will be weaker than previously expected. Guidance and prior estimates called for a 15% Q/Q decline. They now believe ASPs will be down by 18% or more.

Checks in Europe indicate that overall demand for PNDs may have come in towards the low-end of expectations, and they are therefore trimming their full year unit estimates for the market to 15.0 million from 15.5 million. Germany, Europe's largest PND market appears to be particularly nettlesome, as intensified price competition from a large number of players has accompanied slightly softer than expected growth.

Given headwinds in Europe and rapid ASP declines globally, the firm is more cautious on '08 and are slightly trimming their estimate to $4.1 billion and $4.35 from $4.2 billion and $4.43.

Notablecalls: I expect GRMN to get hit following this call. Trading at current valuations, a call like this one is a real kiss of death. Weaker than expected ASPs in the U.S. and weak sales in Europe? Uh oh!

I'm calling this one Actionable!

Comments

[wixeywaxy]

No conscious about misleading small investors may get you a few bucks in the pocket, but it will send you to the hot place in the end. I'm not so sure that even given some stock market profits you'll do so well here and now. There is a price to be paid for hurting others by dishonesty. WW

[cheep]

Click on the link above "More on GRMN", or click here: seekingalpha.com/symbo...

Notice that every entry that makes the short case on GRMN has been WRONG. Read the articles, notice the dates they were written, look at the PPS trajectory. GRMN, stay the course.

[HarMegiddo]

i knew GRMN was going down when i was shopping at christmas time. yes, there were tons of GRMN products being sold, but they were all at 50% or more price reductions. it's not hard to see there is no margin there.
it reminded me of the bins of atari games i used to see on sale when i was a kid.