When Garmin announced their first quarter earnings last week, the company said a weak economy was impacting their bottom line. Although Garmin’s net income was up slightly on an almost 100% jump in portable navigation device unit sales, the units Garmin is selling tend to be in the lower-end GPS lineups this year. Says Garmin president and COO Cliff Pemble, “We see that customers are becoming increasingly sensitive to price”, and that price sensitivity has led to a drop of 35% in the average PND selling price in the first quarter. And the second quarter doesn’t look like it’ll bring any improvements with the average PND selling price dropping at least another 25% this year.
80% of Garmin’s PND sales are in lower-end units under $300, of which bring in 70% of the company’s revenues. Compared to last year’s first quarter when only about 50% of sales came from low-end units, the hit has been drastic. Luckily for Garmin, the raw materials used in the manufacturing of GPS units have dropped in price as well, easing the pressure on the company’s profit margins slightly. And what is the average price paid for a Garmin PND these days? Only $238.
Check out all the details of Garmin’s first quarter in this PDF press release.
via twice
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