Brian Griffin

Garmin: Navigating to Nowhere

A poor allocation of capital is buying hundreds of millions of dollars of stock at prices above 30 and 40 dollars while the business is slowing and margins are weakening. Put another way if they had waited to buy stock now, they could buy twice as many shares. Shareholders would be best served by a return of capital in the form of dividends instead of this waste. GRMN is not alone in this practice - many companies have bought back stock with their cash so they could pump up eps by a couple pennies instead of giving it back to their shareholders to make a better investment decision. I hope that helps you understand what's going on.

Garmin: Navigating to Nowhere

Thanks for all your comments. I think many commenters would be served well by remembering that no matter how cool a product is or how useful (Garmin is both of these) -- the value of a company is derived from future cash flows. Garmin to me seems to fail miserably on this count for the reasons I've outlined - declining ASP, declining margins, increasing competition, and poor allocation of capital. Good luck to all.