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Can Garmin Ltd. (GRMN) Get Over Its Shortcomings?

A new hope?
Its sales and dividends may be lagging, but Garmin Ltd. (NASDAQ:GRMN) has not given up hope yet. Quite the contrary — the company recently announced plans a foray into the world of wearable action cameras with its new VIRB line of products, which, according to its press release, are “durable enough to capture even the most extreme activities right out of the box.”

The news helped Garmin Ltd. (NASDAQ:GRMN)’s stock jump 7% on Aug. 29, and was met with a healthy amount of analyst approval. However, there’s no guarantee that this sudden shift in a new direction will generate the substantial profit Wall Street is anticipating. This also isn’t the first time Garmin has tried to diversify itself; in 2010 the company attempted to launch its own brand of smartphones, sales of which quickly struggled .

Destination unknown
While Garmin Ltd. (NASDAQ:GRMN) may have spiked some Wall Street interest recently, this doesn’t get the company off the hook with its short-sellers. Diversification can be costly, and in launching a new line of cameras, the company could shift from selling something smartphones do well to selling… something else smartphones do well: recording pictures and video. Just because Garmin is seeing its stock go up in the short term doesn’t necessarily mean that either investors or short-sellers will be convinced of the company’s potential for long-term profitability just yet.

The article Can Garmin Get Over Its Shortcomings? originally appeared on Fool.com.

Fool contributor Caroline Bennett has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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