In 2008, the world was relatively certain that Garmin Ltd. (NASDAQ:GRMN) - yes, the GPS maker - wasn't going to survive the advent of the smartphone. As this Slate article by Chadwick Matlin explained that year, "Every new iPhone sold means one fewer person needs a GPS unit in his car. Considering that the Apple (NASDAQ:AAPL) 3G iPhone starts at $200 and integrates music, phone, gaming, the Web, and GPS into one unit, the thing is going to siphon serious business away from the old-line GPS manufacturers. Garmin's entry-level portable GPS models hover north of $100. Almost all of the rest retail for more than $200, which isn't looking like a great deal right about now." And, that was the consensus opinion about how disruptive Apple could be to the core business of Garmin.
And to be fair, Apple and a handful of other GPS-functional smartphone makers made trouble for the map-following-technology company. GRMN shares fall from a peak of $114 in October of 2007 to a low of $16 by December of 2008, right before Garmin Ltd. started to post a decline in trailing-twelve-month earnings, and right before the top line began what would be a two-year slide fro, 2008's peak of $3.5 billion.
Between waning sales and far more interesting consumer technologies coming out in the meantime, Garmin was shelved as a stock worth following, widely relegated (mentally) to the annals of history as a name that was once hot but structurally incapable of being relevant. Think "BlackBerrry (NASDAQ:BBRY)", but without all the denial.
Well, as it turns out, Garmin isn't ready to be put in a box quite yet.
Oh, challenges still abound. Technically speaking, 2013 was the company's worst year since before GPS devices became all the rage, sales wise anyway. It appears the company has finally sloughed off any expensive dead weight to become a lean and relevant company again. Perhaps most encouraging is the fact that last earnings of $3.13 per share of GRMN stock was the most profitable year for the company since 2009's $3.51, when sales and revenue were retreating.
What happened to turn things around? In simplest terms, Garmin Ltd. quietly got really, really good at GPS. To be fair, the GPS-like technology the Apple and other smartphone makers put on their handsets is adequate for most users, who simply need basic driving directions. For the hardcore user of GPC equipment technology though (extreme hikers, bikers, pilots, boaters), GRMN has managed to stay far enough ahead of Apple and others that it's defended its sliver of the global-positioning system market. Now it may even be in a position to take some more market share back.
It would be premature to declare outright victory for the company at this point for GRMN. But, with revenue projected to grow just a bit this year and roughly 2% next year against a backdrop of projected per-share profit growth of 8.3% in 2015 (following 2014's troubling expected per-share earnings dip of 16.8%), you could make a strong turnaround case for the once-great company.
But what about 2014's scary projection? Garmin Ltd. managed to top last year's estimates by about 6%. It'll need to do a little better than that to satisfy investors this year, but it's got a good chance of doing that. And, the way the stock's been acting, it looks like the market's more than giving it the benefit of the doubt.
Crazier things have happened.
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