Garmin shares tumble 12.66 percent after earnings warning

Garmin electronics assemblers work at the company’s Olathe manufacturing plant.
Garmin electronics assemblers work at the company’s Olathe manufacturing plant. The Kansas City Star

Shares of Garmin Ltd. fell 12.66 percent Thursday after the Olathe company warned investors of a weaker-than-expected third quarter.

The company, in a release after markets had closed Wednesday, said its lower revenues in July, August and September would mean the year’s results also would fall short.

Furthermore, earnings per share this year, previously estimated at $2.65, will be closer to $2.25, Garmin said.

Shares fell $4.68 and closed at $32.28.

In its statement, Garmin said quarterly revenues were about $680 million, reflecting a $52 million shortfall in sales from the negative impact of currency value changes.

The company also said revenue from its fitness business grew 23 percent in the quarter, marine revenue was flat, and sales in its automotive and personal device segment were down. Declines in outdoor and aviation revenues were more than the company said it had anticipated.

“The miss is not a great surprise given we have observed Garmin losing share on in both activity trackers and running watches,” Wells Fargo Securities analyst Andrew Spinola wrote to clients in a note Thursday.

Spinola said he was surprised by “softness” in Garmin’s outdoor and aviation businesses, but he added that he wasn’t concerned about aviation in the long term.

The analyst also noted that investors’ moods were volatile regarding Garmin, which had been more confidently followed when its personal GPS devices were its largest business.

“Sentiment swings wildly on Garmin, and we believe the market loses sight of Garmin’s exceptional ability to innovate and monetize its innovations. This is one of those times, in our view,” Spinola’s note said.

Mark Davis: 816-234-4372, @mdkcstar