TomTom NV turned in a first-quarter net profit on higher services revenue but said it expects device sales to be flat this year.
The Dutch navigation-equipment maker posted a net profit of €3.1 million ($4.1 million), compared with a year-earlier loss of €37 million. Increased revenue from content and services helped boost sales 26% to €268 million from €213 million in the first quarter of 2009.
Chief Executive Harold Goddijn said the company is increasingly moving into content and services, which include live traffic services, mapping, databases and speed-camera information, to bolster its traditional offering of personal navigation devices.
TomTom is also developing different ways of selling new content and services, Finance Chief Mariana Wyatt said, without elaborating.
In the latest quarter, TomTom sold 1.6 million personal navigation devices, a 15% rise from a year earlier. The average price was €89, a 10% decline. The company, however, said it will no longer disclose volume sales or average selling prices, as the growing service component of its sales mix makes comparisons difficult.
TomTom also reiterated its outlook for broadly flat revenue and earnings per share in 2010.
TomTom’s main rival in the navigation-equipment market is Garmin Ltd.
Monday, shares of TomTom rose 9.8% to end at €6.57 in Amsterdam. TomTom’s shares have lost 55% of their value over the past 12 months, compared with a 49% rise in the benchmark AEX Index.
The company has been hit by plunging consumer demand for electronic products that led to falling sales and prices.The company’s shares were hurt earlier this year when Google Inc. and then Nokia Corp. said they would offer free navigation on their mobile phones.
On Monday, TomTom announced a new deal with Ford Motor Co., which Mr. Goddijn said is an “important” win, marking the first time TomTom will deliver content through an auto maker. The company also announced a continuation of its contract with Fiat’s Alfa Romeo.
[ Story by Roberta B Cowan appeared on Wall Street Journal Online]
