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A record-high share price shows Garmin is still a thing
The resilient GPS-enabled device company posted much-better-than-expected results, driven by its fitness division. The stock jumped over 20% on Wednesday.
Shares of Garmin, the venerable producer of fitness and other standalone devices, posted their second-biggest single-day jump on Wednesday, as the stock closed at a record $204.92. It was the biggest gainer in the S&P 500 on the day.
A stellar earnings report was the reason. The company posted much-better-than-expected profit of $399 million on a record $1.59 billion in revenue. It was Garmin’s third straight quarter of record sales.
One watching the markets today would have no inclination that Garmin’s goose could have been well and truly cooked 15 years ago.
In October 2009, Google announced that its Android mobile-phone operating system would include personal navigation services for free, a development quickly followed by Apple.
In one fell swoop, the reason to own standalone GPS devices — what Garmin sold and still sells — was effectively destroyed.
As smartphone sales boomed and the economy contracted sharply between late 2007 and early 2009, Garmin’s sales collapsed by 65%.
How did Garmin survive? After an ill-fated and costly attempt to develop its own smartphone, it decided to stick to niches it knew well by providing GPS devices for aviation, personal fitness, and boating. It expanded geographically, boosting sales to Europe. And it grew through acquisitions.
In its most recent quarter, the company’s lines of Forerunner and Fenix watches for athletes continued to do numbers, helping drive a 21% surge in revenue in Garmin’s outdoor division to $527 million.
