Don’t Cry for TomTom

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By Amy Gilroy Don’t cry for TomTom, because business at the GPS maker is apparently picking up. In a surprise swing back to profitability, TomTom reported a $4 milllion profit in the first quarter compared to a loss of about $49 million for the year-ago quarter.
TomTom increased its worldwide PND (portable navigation devices) sales for the period ending March 31, 2010 by 15 percent to 1.6 million unit, and it’s doing more OEM automotive business.
Where TomTom is really shining here is in OEM sales. Sales of automotive products including maps were up 216 percent to $52 million, driven by OEM GPS device sales to Renault. This past quarter TomTom also swung new deals for GPS devices with Alfa Romeo and new map deals with Ford. Ford Sync products will now use TomTom’s Tele Atlas maps.
The AP said, “The company is gradually recovering from its ill-fated purchase of digital mapmaker Tele Atlas, which it bought for euro2.9 billion in the fourth quarter of 2008.”
Bloomberg’s BusinessWeek said shares of TomTom soared in Amsterdam trading after the GPS-maker reported “an unexpected first-quarter profit as it sold more mapping instruments to car companies and increased revenue from content and services.”
So TomTom’s ace in the hole is that the PND–a business which is currently flat and expected to decline within the next few years—is now only 53 percent of the company’s sales, according to Bloomberg calculations. PNDs were 66 percent of its business during the 2009 first quarter.
Total TomTom sales for Q1 were up 26 percent to $358 million, compared to $284 million a year ago. For the full year TomTom expects sales to be flat against last year in sales and earnings per share, it said.
In North America, TomTom increased its PND share by one percent to 22 percent while total sales of PNDs in North America remained flat at 2.6 million units (for the entire industry). Average selling prices of PNDs worldwide continued to slide by 10 percent.
Also TomTom is promising more innovations this year. Hopefully, some of that will be in PNDs.
Source: TomTom, AP, Bloomberg via BusinessWeek
Photo caption: TomTom CEO Harold Goddijn says TomTom will “bring exciting new innovations to the market this year.”

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