Monday, July 17, 2006

Garmin Tries to Navigate Mass Market carries a Dow Jones article about whether Garmin (GRMN) can takes its GPS satellite-navigation equipment from niche products to mainstream. The article notes that "as Garmin continues to move its products _ and particularly its fast-growing line of automotive-GPS devices _ into discount retailers like Wal-Mart Stores Inc. and Target Corp., prices will drop. The growing concern on Wall Street is that the retailing move will weaken Garmin's profit margins."

Bear Stearns analyst Peter Barry said, "If Garmin chooses to cut prices, growth expectations may be met, but profitability is likely to suffer. If, on the other hand, Garmin sticks to their premium-pricing model, it is likely that its market share will erode."

According to the article, Garmin's "varied product lines and in-house engineering and manufacturing operations allow Garmin to quickly bring technologies from one product into another." Barry said, "In the consumer-electronics space, where consumer preference is particularly fickle, quick lead times can mean the difference between success and failure."

The article looks at Garmin's performance and recent efforts...