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October 20, 2010, 7:01 AM EDT
By Martijn van der Starre and Maud van Gaal
(Adds analyst comment in fourth paragraph.)
Oct. 20 (Bloomberg) -- TomTom NV, Europe?s biggest maker of portable navigation devices, said third-quarter profit fell as the dollar declined versus the euro and development costs rose.
Net income dropped to 19.3 million euros ($26.6 million) from 30.5 million euros a year earlier, the Amsterdam-based company said in a statement today. That missed the average estimate of 29.9 million euros in a Bloomberg survey of eight analysts. Spending on technology increased to 36.5 million euros from 31.4 million euros.
TomTom, which competes with Garmin Ltd. and Google Inc., aims to get more revenue from maps, services and built-in systems in cars as sales of portable navigation devices slow and competition increases from services on smartphones. The Dutch company said on Sept. 30 that it reached a supply agreement with Japanese carmaker Mazda Motor Corp.
?The quality of earnings slightly disappointed,? Wim Gille, an Amsterdam-based analyst at Royal Bank of Scotland Group Plc, said in an investor note today. Gille rates TomTom ?buy.?
TomTom dropped 0.8 percent to 6.02 euros at 11:12 a.m. in Amsterdam trading, valuing the company at 1.33 billion euros.
Dollar Decline
?The significant weakening of the dollar against the euro toward the end of the quarter,? as well as a ?seasonally high level of option and forward contracts,? led to a financial charge of 20 million euros, TomTom said today.
Third-quarter sales rose 3 percent to 375 million euros, helped by increased revenue at the automotive unit. That beat the 365.5 million-euro average estimate of 12 analysts.
TomTom?s European market share for personal navigation devices rose to 48 percent from 45 percent a year earlier, the company said. Industrywide European sales of the devices shrank to 3.4 million units in the quarter from 3.8 million a year earlier. The North America market declined to 2.8 million units from 3.1 million, with the Dutch company?s share rising to 25 percent from 20 percent.
TomTom said it?s sticking to full-year forecasts for revenue and earnings per share to be ?broadly flat? compared with last year. Sales totaled 1.48 billion euros in 2009, while earnings per share amounted to 47 cents.
Mazda, Japan?s second-largest car exporter, will buy a dashboard-installed multimedia and navigation device developed in cooperation with Sanyo Electric Co., offering the product as an option on the new Mazda5 model in Europe, TomTom said last month.
Mazda Revenue
Revenue generation from the Mazda agreement won?t be significant this year, ?but we expect it to build next year,? Chief Financial Officer Marina Wyatt told reporters today.
A new joint venture with Beijing-based AutoNavi Holdings Ltd. will give TomTom customers access to digital maps and real- time traffic services in China in a standard format, the Dutch company said on Oct. 8.
TomTom has turned down several takeover bids, the Sunday Times reported Oct. 3, citing Chief Executive Officer Harold Goddijn. Goddijn declined to say whether the company will still be around in 10 years, the newspaper reported.
Wyatt said she felt ?confident? about TomTom?s strategy as an independent entity, and declined to comment when asked if the company was in takeover talks.
--Editors: Tom Lavell, Robert Valpuesta.
To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net; Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net.
To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net
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(Adds analyst comment in fourth paragraph.)
Oct. 20 (Bloomberg) -- TomTom NV, Europe?s biggest maker of portable navigation devices, said third-quarter profit fell as the dollar declined versus the euro and development costs rose.
Net income dropped to 19.3 million euros ($26.6 million) from 30.5 million euros a year earlier, the Amsterdam-based company said in a statement today. That missed the average estimate of 29.9 million euros in a Bloomberg survey of eight analysts. Spending on technology increased to 36.5 million euros from 31.4 million euros.
TomTom, which competes with Garmin Ltd. and Google Inc., aims to get more revenue from maps, services and built-in systems in cars as sales of portable navigation devices slow and competition increases from services on smartphones. The Dutch company said on Sept. 30 that it reached a supply agreement with Japanese carmaker Mazda Motor Corp.
?The quality of earnings slightly disappointed,? Wim Gille, an Amsterdam-based analyst at Royal Bank of Scotland Group Plc, said in an investor note today. Gille rates TomTom ?buy.?
TomTom dropped 0.8 percent to 6.02 euros at 11:12 a.m. in Amsterdam trading, valuing the company at 1.33 billion euros.
Dollar Decline
?The significant weakening of the dollar against the euro toward the end of the quarter,? as well as a ?seasonally high level of option and forward contracts,? led to a financial charge of 20 million euros, TomTom said today.
Third-quarter sales rose 3 percent to 375 million euros, helped by increased revenue at the automotive unit. That beat the 365.5 million-euro average estimate of 12 analysts.
TomTom?s European market share for personal navigation devices rose to 48 percent from 45 percent a year earlier, the company said. Industrywide European sales of the devices shrank to 3.4 million units in the quarter from 3.8 million a year earlier. The North America market declined to 2.8 million units from 3.1 million, with the Dutch company?s share rising to 25 percent from 20 percent.
TomTom said it?s sticking to full-year forecasts for revenue and earnings per share to be ?broadly flat? compared with last year. Sales totaled 1.48 billion euros in 2009, while earnings per share amounted to 47 cents.
Mazda, Japan?s second-largest car exporter, will buy a dashboard-installed multimedia and navigation device developed in cooperation with Sanyo Electric Co., offering the product as an option on the new Mazda5 model in Europe, TomTom said last month.
Mazda Revenue
Revenue generation from the Mazda agreement won?t be significant this year, ?but we expect it to build next year,? Chief Financial Officer Marina Wyatt told reporters today.
A new joint venture with Beijing-based AutoNavi Holdings Ltd. will give TomTom customers access to digital maps and real- time traffic services in China in a standard format, the Dutch company said on Oct. 8.
TomTom has turned down several takeover bids, the Sunday Times reported Oct. 3, citing Chief Executive Officer Harold Goddijn. Goddijn declined to say whether the company will still be around in 10 years, the newspaper reported.
Wyatt said she felt ?confident? about TomTom?s strategy as an independent entity, and declined to comment when asked if the company was in takeover talks.
--Editors: Tom Lavell, Robert Valpuesta.
To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net; Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net.
To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net
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