July 22 (Bloomberg) -- TomTom NV, Europe's largest maker of car-navigation devices, rose the most in three months in Amsterdam trading after reporting second-quarter profit that beat analysts' estimates.

TomTom gained 1.47 euros, or 9.2 percent, to 17.52 euros, the biggest gain since April 22. TomTom shares have lost 66 percent this year, compared with a 22 percent slide of the benchmark Amsterdam Exchanges Index.

Net income declined to 51.6 million euros ($82.2 million) from 68.3 million euros a year earlier, mainly because of costs linked to the acquisition of Tele Atlas NV, the Amsterdam-based company said yesterday. Analysts had anticipated profit of 41.9 million euros, the median of 12 estimates in a Bloomberg News survey. Second-quarter sales rose 19 percent to 453.4 million euros, topping the 422.5 million euros analysts had anticipated.

``It's a relief,'' said Michiel Plakman, a fund manager at Robeco in Rotterdam, which oversees about 150 billion euros including TomTom shares. ``The numbers were not as bad as feared and showed a recovery compared with the preceding quarter.''

TomTom, which competes with Garmin Ltd., yesterday reiterated a sales forecast for its traditional business of 1.8 billion euros to 2 billion euros for 2008. The company on April 8 cut its forecast from as much as 2.2 billion euros after first- quarter sales fell 11 percent as retailers reduced inventory and it cut prices before unveiling new models.

Tele Atlas Purchase

``Despite all the hassle in the financial market, all the bad headlines, people are still buying navigation devices,'' Chief Executive Officer Harold Goddijn said in a phone interview today. ``They consider the product essential. That's good news. It gives us protection against bad macro-economic circumstances.''

The results included one month of earnings from Tele Atlas, which TomTom bought for 2.9 billion euros. Operating expenses climbed 50 percent to 114.4 million euros, as TomTom included costs to amortize Tele Atlas's map database. Earnings before interest, tax, depreciation and amortization rose to 103 million euros from 98 million euros in the quarter.

Five-Year Loan

TomTom acquired Tele Atlas to expand into the global market for digital maps, which will grow 87 percent to $2.8 billion in 2010, according to Reading, England-based technology research firm Canalys. Tele Atlas is the world's second-largest maker of maps used in navigation devices, trailing Chicago-based Navteq Corp. Nokia Oyj, the world's largest mobile-phone maker, bought Navteq for $8.1 billion this month.

TomTom took out a five-year loan of 1.59 billion euros to finance the purchase. The company is ``comfortable'' with the covenants of the loan, it said in yesterday's statement. Net debt stood at 1.29 billion euros at the end of the period, which equals 2.8 times earnings before interest, tax, depreciation and amortization, the company said. TomTom anticipates the ratio will drop below 2.5 times Ebitda by the end of next year.

``The possibility of an equity offering was casting a shadow over the stock,'' Robeco's Plakman said. ``Investors were very concerned TomTom would get too close to the borders of its debt covenants. The most important element is that this concern has been removed for now.''

In today's interview, Goddijn declined to say whether the company will sell new shares this year.

The average selling price for devices in the second quarter rose to 131 euros, recovering from a record-low 117 euros in the preceding period. TomTom sold 3.1 million portable navigation devices in the quarter, up from 1.8 million a year earlier.

The company sees ``good demand everywhere,'' Goddijn said in the interview.

TomTom had a market share of 45 percent to 50 percent in Europe in the quarter and more than 20 percent in North America. TomTom aims to achieve a market share of 30 percent in the U.S., Goddijn said without giving a timeframe.

To contact the reporter on this story: Marcel van de Hoef in Amsterdam at mvandehoef@bloomberg.net

Last Updated: July 22, 2008 12:07 EDT