Nov. 4 (Bloomberg) -- Garmin Ltd., the biggest maker of portable navigation devices in the U.S., fell 15 percent in Nasdaq trading after saying profitability and selling prices will decline this quarter.

Gross margin, the percentage of sales left after production costs are paid, will narrow to the low-to-mid 40-percent range after expanding to 52 percent last quarter, the Camana Bay, Cayman Islands-based company said today on a conference call.

The company is competing with maps that come with mobile phones and with free routing software introduced last month by Google Inc. Garmin’s Nuvifone G60 is selling slowly and U.S. carrier AT&T Inc. is cutting prices, which will make the device less profitable, Garmin said today.

Third-quarter revenue declined for the fourth consecutive period, dropping 10 percent to $781.3 million. Net income rose to $215.1 million, or $1.07 a share, from $171.2 million, or 82 cents, a year earlier, the company said.

Garmin slid $4.57 to $26.84 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has increased 40 percent this year.

‘Clean Exit’

Profit adjusted for fluctuations in currency was $1.02 a share, the company said. Analysts in a Bloomberg survey had predicted 70 cents, on average.

Garmin cut advertising expenses to drive profit higher last quarter, though the earnings didn’t reassure investors about the company’s long-term prospects, Oppenheimer & Co. analyst Yair Reiner said.

“The beat, as impressive as it is, will likely do little to ease investor concerns about the sustainability of the” business, said New York-based Reiner, who rates the shares “market perform” and doesn’t own them. “Against that backdrop, some holders may use any strength this morning as a pathway to a clean exit.”

(To access the company’s conference call, held at 10:30 a.m. New York time, go to http://www.garmin.com/aboutGarmin/invRelations/irCalendar.html.)

To contact the reporters on this story: Amy Thomson in New York at athomson6@bloomberg.net

Last Updated: November 4, 2009 16:09 EST