Garmin (NASDAQ:GRMN): 2008 Could Get Tougher - CIBC

- CIBC is out with a very interesting call on Garmin (NASDAQ:GRMN) saying that while their checks show the co is likely to report very solid Q407 results, steep ASP declines and softening growth in Europe could dampen the possibility of a blowout. The same factors are also making the firm slightly more cautious about 2008.

They are raising their 4Q GRMN PND unit estimate to 4.3M from 4.1M, to reflect extremely strong U.S. demand. But they also believe ASPs will be weaker than previously expected. Guidance and prior estimates called for a 15% QoQ decline. They now believe ASPs will be down by 18% or more.

Checks in Europe indicate that overall demand for PNDs may have come in towards the low-end of expectations, and they are therefore trimming their full year unit estimates for the market to 15.0 million from 15.5 million. Germany, Europe s largest PND market appears to be particularly nettlesome, as intensified price competition from a large number of players has accompanied slightly softer than expected growth.

Given headwinds in Europe and rapid ASP decline globally, the firm is more cautious on '08 and are slightly trimming their estimate to $4.1B and $4.35 from $4.2B and $4.43.

Notablecalls: I expect GRMN to get hit following this call. Trading at current valuation, a call like this one is a real kiss of death. Weaker than expected ASP's in the US and weak sales in Europe? Uhoh!

I'm calling this one Actionable!