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TomTom Shares Decline Most in Eight Months on Lower 2012 Earnings Forecast

TomTom NV (TOM2), Europe’s biggest maker of portable navigation devices, dropped the most in eight months in Amsterdam trading after saying revenue and earnings per share will decline this year on shrinking demand for the devices.

Sales will fall to about 1.1 billion euros ($1.5 billion) this year from 1.27 billion euros in 2011 and adjusted earnings per share will decrease to about 35 cents per share from 55 cents, the company said in a statement today.

“This is not good at all,” said Jos Versteeg, an Amsterdam-based analyst at Theodoor Gilissen Bankiers.

The market for personal navigation devices declined 10 percent in Europe and 25 percent in the U.S. last year, Chief Executive Officer Harold Goddijn said in a phone interview. TomTom is trying to boost sales of built-in navigation systems for cars as well as electronic maps and other software.

“We assume similar declines this year,” Goddijn said.

Analysts have forecast revenue of 1.2 billion euros and adjusted earnings per share of 45 cents, according to the average of 15 and 16 estimates compiled by Bloomberg. Last week, competitor Garmin Ltd. (GRMN) forecast 2012 sales and profit that topped analyst expectations.

TomTom shares fell as much as 19 percent and were 16 percent lower at 3.70 euros at 11:47 a.m. in Amsterdam, reducing the company’s market value to 821 million euros.

Consumer Downturn

Sales from the consumer segment were about 65 percent of revenue in the past year and the proportion will decline going forward, Chief Financial Officer Marina Wyatt said in a conference call with reporters today. The decline should be compensated for by growth in automotive and business solutions.

The company has announced deals in the past four months with Samsung Electronics Co. (005930) for maps and location content and with Ford Motor Co. (F) and General Motors Co. (GM)’s Opel division to supply built-in navigation systems.

“We will see an impact of those deals in our earnings in 2012 and 2013,” Goddijn said. The CEO said the company is “working hard” to return to profit growth.

Fourth-quarter net income declined to 11.9 million euros, including restructuring costs of 13.6 million euros, from 51.7 million euros a year earlier. Revenue dropped 31 percent to 357 million euros.

Goddijn started an overhaul last year that includes cutting 457 jobs or about 10 percent of the total workforce, aiming to save 50 million euros in 2012.

The company expects to reduce 2012 operating expenses to about 500 million euros from 538 million euros in 2011.

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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