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You are here: Home / Company News / Is Garmin Signaling A Price War?

Is Garmin Signaling A Price War?

July 17, 2015 By Dan Rosenbaum

Garmin-LogoWe noticed yesterday, while looking for something else entirely, that Garmin took a big hit in its stock price, dropping from about $46 to as low as $40 before recovering to $43. While we try to stay away from stock analysis (being much better at product than finance), the reason for the drop signals something interesting in the smart band market.

It turns out that on Wednesday night, Garmin CEO Cliff Pemble told stock analysts that his company’s 2Q earnings would come in at around 70 cents per share instead of the 90 cents they had been expecting, and that the company’s margin would be more like 20 percent instead of 23 percent. The lowered expectations isn’t because the products aren’t selling: revenues will still be at $2.9 billion.

Here’s part of what Pemble told the market:

the current competitive environment in the fitness market necessitates more aggressive pricing with higher advertising expenses

In other words, expect price cuts and ramped up promotions for wearables.

Garmin’s got a healthy portfolio in all things GPS and maps on many mobile platforms: automotive, boats, and aviation. Wearables is just part of its business, although a growing one. But the wearables business is competitive, and Garmin is saying that — in the face of Fitbit’s IPO and war chest, and the introduction of the Apple Watch — it intends to play hard. The company likes its product line, and with good reason. What it’s saying now is that it’ll be aggressive in finding ways to get them onto people’s wrists.

 

 

Last updated by Dan Rosenbaum on February 1, 2017.

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