Spatial Dynamics

Earlier this week, Garmin announced that it has slashed its 2008 sales forecast by $600 million.

The world’s No. 1 navigation company cited economic concerns and high gas prices for causing a slowdown in the navigation market. Furthermore, a price-cutting war with European rival TomTom is cutting into profits.

Garmin also announced that it has again delayed the launch of the Nuvifone to the first half of 2009, saying meeting carrier-specific requirements will take longer than anticipated. The company has now pushed back the launch twice.

When Garmin originally announced their Nuvifone plans last January, the phone was intended to be sold as an unlocked device; the company now plans to release the device with a single or multiple wireless carriers. Garmin claims that the delay was due to “certification and optimization” required by their carrier-partners.

Oddly, all this bad news came as Garmin reported record sales and profits for the second quarter. Sales of their devices outpaced the industry in the U.S. and Europe and it has increased its market share worldwide.

Garmin did report a $66 million gain on the sale of (New Hampshire-based) TeleAtlas stocks to (Netherlands-based) TomTom, its primary competitor. Last year, Garmin bought the shares during an attempt to purchase the mapmaker .

The stock has now decreased by more than 50% in the last 52 weeks and it’s at the lowest price since March 2006.

Garmin’s foray into the cellular world is fraught with peril, the Nuvifone needs to be exceptional and reliable. The company does appear to be in a prime position to design and manufacture a GPS-enabled, spatial-centric cell phone.

Unlike the iPhone 3G, the Nuvifone will have an integrated GPS chip and will be able to provide turn-by-turn directions. The navigation functions on the Nuvifone could make the iPhones GPS capabilities look feeble in comparison.

It’s apparent that with each delay of the Nuvifone, the risks grow greater for Garmin.

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