TomTom NV (TOM2), the Dutch supplier of navigation applications for Apple Inc. (AAPL)’s iPhone 5, lowered its prediction for sales this year after declining revenue from carmakers, sending its shares down the most in a month.
“We’re facing a very weak demand situation in Europe in automotive,” Chief Executive Officer Harold Goddijn said in a conference call today, adding TomTom expects automotive revenue to remain pressured in the coming quarters. The company now forecasts sales of around 1.05 billion euros ($1.36 billion) against 1.10 billion euros previously. Amsterdam-based TomTom maintained its forecast for adjusted earnings per share of around 35 cents.
The market for portable navigation devices has plummeted in North America and Europe since the introduction of the iPhone in 2007 and is expected to shrink to $950 million by 2019 from $9.6 billion in 2008, when revenues and unit shipments peaked, according to Strategy Analytics. Price erosion for devices has halted, Goddijn said, adding market volumes will decline again next year.
Automotive sales dropped 16 percent in the third quarter to 49 million euros and were “weaker than expected, mainly because Renault isn’t doing well at all”, Maurits Heldring, an analyst at ABN Amro said by phone.
TomTom shares dropped as much as 4.6 percent, the biggest intraday fall since Sept. 28, and were 3.1 percent lower at 3.73 euros as of 10:15 a.m. in Amsterdam, reducing the market value to 827 million euros. The mapmaker has lost more than 90 percent of its value since the introduction of the iPhone.
Consumer revenue dropped to 172 million euros from 225 million euros a year earlier, as the market for portable navigation devices declined.
Net income declined to 22.2 million euros from 28.9 million euros a year earlier, the company said. Four analysts surveyed by Bloomberg estimated profit of 18 million euros on average. Sales fell 19 percent to 274 million euros, compared with an average estimate of 282 million euros of seven analysts.
The maker of consumer navigation equipment is developing systems for vehicles and mapping software for smartphones to combat declining demand for its traditional GPS products. Apple included the TomTom’s application as part of the new iOS 6 software in September.
TomTom shares rose 18 percent in the week to Oct. 19 after SNS-analyst Martijn den Drijver suggested the founders, including Goddijn, could bid for the company using financing from Cupertino, California-based Apple. The CEO said today in an interview that TomTom’s strategy is to remain independent.
“Martijn den Drijver has done a good job with his report, but it really is on his account,” Goddijn, who declined to comment on a delisting scenario, said.
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