A double set of bad news sent Garmin stock tumbling on Wednesday. Not only did rival Tom Tom release a good earnings report, Garmin also had the bad luck of seeing an announcement regarding a hot new Droid phone that will challenge its standalone GPS units.
Garmin stock plunged by 16.4 percent, or $6.19, and closed at $31.59. Rival Tom Tom reported a 15 percent drop in revenue and a 48 percent drop in earnings for the third quarter compared to the same quarter of 2008. However, Tom Tom earnings rose 42 percent compared to the second quarter. Tom Tom does have its iPhone GPS unit in its pocket as well.
Meanwhile, Garmin plans to discuss its third-quarter earnings on Nov. 4. Just to be clear, despite the Garmin stock drop today, it had nothing to do with Garmin's earnings, just the perception of the effect of Tom Tom and the other big news today: Droid phones and their GPS capabilities.
Today, Verizon announced news on the Droid phones. It has been playing up the Android device's capabilities, as well as slamming the iPhone in ads. Today the carrier announced that the Droid would be the first device to have Google Maps Navigation with turn-by-turn voice guidance. Viola, down goes Garmin stock.
You can see why Garmin stock would take a hit on that news. The new capabilities of the Droid phone would be a major blow to standalone GPS navigation units. It is not something that was unexpected, however, as more smartphones continue to include GPS capabilities.
So far, Wall Street has loved the Droid phones. So far, we can see that Garmin stock does not.
Garmin had little to say about the Droid phones, saying it would not make a comment until after the device launches and they take a look at it, which is Nov. 6th. That will be after Garmin's earnings results, however, so Garmin stock might be affected still further in that timeframe.
It is true that Garmin has introduced its own smartphone. Its first one, the nüvifone G60, in the United States exclusively through AT&T Inc. on Oct. 4. Android devices, and the Droid phone in particular, are hot items in terms of buzz right now, and the nuvifone is not.
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