Apple’s (Nasdaq: AAPL) iPhone has become a handy tool for driving directions. And Google’s (Nasdaq: GOOG) new Android phones actually gives away GPS directions for free. But anything that’s free is a real problem for anyone trying to charge for a product. So we shouldn’t be surprised to see Garmin (Nasdaq: GRMN), a leading vendor of GPS products, announce weak sales results in its first-quarter earnings report released before the opening. Though we should be surprised that shares were near a 52-week high in the face of such clear headwinds.

Shares of Garmin are down more than -7% today, but this is likely just the beginning of a sell-down. Despite the weak quarter, management sticks by full-year forecasts, even if Garmin needs to work even harder in coming quarters to make up for this first-quarter shortfall. And that could be hard to pull off. Even if Garmin weren’t facing new competitors, it’s fair to wonder if this market is rapidly maturing, as most consumers that would like to have a GPS probably already have one. (Garmin’s core automotive market, which accounts for one-half of sales, saw sales drop -15% from a year-ago).

In coming days, it will be increasingly hard for mutual fund managers to keep a stake in this former technology stalwart. These funds can’t exit a position quickly, so shares may take a while to find a floor. And that’s a clear opportunity for short sellers – even after today’s drop. And you shouldn’t seek to initiate a long position once shares have found a floor. The tepid quarterly sales results are likely to keep on coming.

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#-ad_banner-#How do you lose nearly $1.5 billion in market value in a single day? When the Food and Drug Administration rejects your drug that many had expected would receive approval. InterMune’s (Nasdaq: ITMN) pirfenidone drug, which treats idiopathic pulmonary fibrosis, a type of lung disease, had only recently shown promise in Phase III clinical trials. All is not lost. InterMune was asked to start a fresh clinical trial, which could take several years to complete. But that’s better than a complete rejection. Several analysts think that today’s sell-off is overdone, as InterMune has other promising drugs in the pipeline, including a treatment for Hepatitis C.

Moreover, InterMune’s pirfenidone is the only late-stage drug treating this form of usually fatal lung disease, so better safety results from the next trial could yield approval. And the drug, which is already approved for use in Japan, may also get approval from European regulators. Once a floor has been found, it makes sense to take a small position here, as today’s selling might be an over-reaction.

InterMune shows the perils of biotech volatility. Investors bracing for FDA approval had bid up shares from $14 on March 4 to $38 by March 10. Many hoped that FDA approval would take shares toward the $75 mark. Investors of InterMune ignored the clear safety problems when bidding up shares toward the $40 mark. And they are over-estimating the depths of the company’s new setback today. Biotech investing is an emotional business.

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In keeping with Tuesday’s look at “good earnings/bad stock reaction,” we are seeing some companies have the misfortune to release generally solid results on a day when the market is under pressure. For example, auto parts supplier TRW (NYSE: TRW) continues to see a sharp improvement in demand after a dismal 2009. TRW’s profits surpassed analysts’ forecasts by a wide margin. And many expect U.S. auto sales volumes to grow further in 2011 and 2012, which should help TRW to continue powering higher. But shares are down -6% anyway, perhaps because management notes that European auto sales volumes could come under pressure later this year. Nevertheless, shares trade for less than 10 times likely 2011 profits. (Consensus estimates call for profits of $2.91, but they are likely to be upwardly revised past the $3 mark after this morning’s earnings beat).

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Shares of PolyOne Corp. (NYSE: POL) are also badly slumping today, even though the maker of plastics is seeing a nice demand upturn among its industrial customers. A healthy housing market is crucial for continuing positive sales trends at PolyOne, as the company provides raw materials for exterior siding as well as plumbing fixtures. And that market is unlikely to be on its feet before 2011 or 2012. Shares may mark time for awhile as few near-term catalysts exist and shares are not compellingly cheap. But this is a name to watch when you eventually position your portfolio for a housing rebound.