(Reuters) - Garmin Ltd’s (GRMN.O) quarterly results blew past estimates as revenue from personal navigation devices grew on improved pricing, and demand for its outdoor and fitness GPS products rose, sending its shares to their highest in nearly four years.
The No. 1 U.S. navigation device maker also forecast 2012 results well ahead of consensus estimates, suggesting its strategy of bundling personal navigation devices with high-margin mapping services was beginning to pay off.
The automotive/mobile segment, known for its personal navigation devices (PNDs) that were once a must-have gadget, has been faced with falling demand and prices for more than three years as consumers turned to GPS-enabled smartphones.
While the company continued to sell fewer units in the fourth quarter, higher selling prices helped boost revenue at the segment by 4 percent. It accounted for 70 percent of total sales during the period.
For an earnings graphic link.reuters.com/gug76s
Garmin’s PND segment benefited as it grabbed market share from smaller competitors and expanded into the Asia-Pacific region, said Wedbush Securities analyst Scott Sutherland.
“They also have a smaller but growing in-dash automobile unit. It’s about 10 percent of the unit, but it’s growing.”
Faced with the rapid decline in PND sales, Garmin and its European rival TomTom (TOM2.AS) have been forced to look for new areas of growth.
Last year, the company said it would sell its traditional PNDs along with live traffic and mapping services, but warned the nature of the business did not allow for up-front revenue, and it would see rewards only in the latter half of 2012.
For 2012, Garmin expects a profit of $2.45 to $2.60 a share, excluding items, and revenue of $2.7 billion to $2.8 billion.
Analysts were looking for a profit of $2.41 a share, excluding items, and revenue of $2.55 billion, according to Thomson Reuters I/B/E/S.
“We expect the impact of deferring Lifetime maps revenue over three years should be relatively neutral to 2012 EPS (earnings per share) and be a tailwind in 2013,” Wedbush had said in a note dated February 17.
Revenue at the outdoor/fitness segment increased 35 percent to $121 million. The automotive/mobile segment revenue increased 4 percent to $579 million, compared with a 31 percent decline a year ago.
Fourth-quarter net income at the Switzerland-based GPS device maker rose to $165.5 million, or 85 cents a share, from $132.9 million, or 68 cents a share, a year ago.
Excluding items, the company earned 96 cents a share, while revenue rose 9 percent to $910 million.
Analysts had expected earnings of 66 cents a share, before one-time items, on revenue of $769.9 million.
Shares of the company rose as much as 12 percent to $49.93 in morning trading on Wednesday on the Nasdaq.
Reporting by Sayantani Ghosh and Sruthi Ramakrishnan in Bangalore; Editing by Saumyadeb Chakrabarty