GPS Devices Take a Back Seat: Garmin Ltd. (GRMN), Apple Inc. (AAPL)

Smartphones have become an everyday device. They allow access to millions of applications, and have, in essence, become mini computers. Obviously, cell phone manufacturers and technology companies love this, but there is at least one company that despises it.

Garmin Ltd. (NASDAQ:GRMN) is a household name that used to be a leader in GPS technology. Their fourth quarter results were very unimpressive, and led to a huge decline in their stock. In fact, the company’s stock just hit a 52-week low after falling nearly 9.5% on Wednesday. Total revenues fell 16% from the fourth quarter a year ago, and there was not a single geographical region that increased revenues.  In the United States alone revenues fell to $445 million, a decrease of 17%. Garmin’s Earnings Per Share (EPS) fell 22% to $0.66 from $0.85. Gross margins actually increased by 1% from 48% to 49%.

Even with the fourth quarter being very disappointing, the year as a whole was not as shabby. EPS rose 3%, gross margins increased 4%, and total annual revenues decreased by 2% or roughly $40 million. Despite the marine segment of Garmin’s business being the only revenue decrease besides automotive/mobile, I don’t see this starting a trend. The outdoor, fitness, and aviation segments all increased 11%, 8%, and 2% respectively, while marine and automotive/mobile decreased 6% each.

Things might not be looking great for Garmin, but why? One of the biggest reasons is the ability for people to use GPS directly from their phones. Garmin’s primary product has basically become a feature on a phone which was not the case just a few years ago. I would expect the aviation and marine segments of their business to grow because most people flying planes and driving boats don’t want to use “Google Maps” to navigate. These segments will keep Garmin afloat, though the company probably won’t thrive.

With 54% of Apple Inc. (NASDAQ:AAPL)’s revenues being acquired through their iPhones, this is one reason Garmin might be struggling. This means approximately $84.5 billion was generated by iPhones in 2012. The company shows more confidence in its stock with 64% institutional ownership, as opposed to just 46% by Garmin. Apple’s EPS have risen nearly 60% in the past year, and have increased annually for more than a decade. Apple’s gross margins have increased an impressive 8.4% in the past year, along with an 11.4% increase in net margins.