February 18, 2011, 11:55 AM EST
By Maaike Noordhuis
(Updates with closing share price from first paragraph.)
Feb. 18 (Bloomberg) — TomTom NV, Europe’s biggest maker of portable navigation devices, fell the most since Oct. 2009 in Amsterdam trading as the company forecast “broadly flat” revenue and earnings per share for 2011.
Amsterdam-based TomTom dropped 11 percent to 6.47 euros, giving the company a market value of 1.4 billion euros ($1.9 billion).
“the outlook for 2011 disappoints coming in below expectations,” ING analyst Marc Zwartsenburg said in a note.
TomTom, which competes with Garmin ltd. and Google Inc., faces increasing competition from smartphones which feature similar services. the company aims to get more revenue from maps, services and built-in systems in cars as sales of portable navigation devices, or PNDs, slow. For 2011, TomTom expects a decline of as much as 15 percent in the overall PND market, Chief Executive Officer Harold Goddijn said today.
“We have become less dependent on the success of the consumer market and we will continue this trend into 2011,” he said in an interview with Bloomberg, reacting on the fall in share price today. “This might not be proceeding as fast as shareholders want it to be.”
the company will “accelerate” the development of technologies this year, Goddijn said. With the company making the transition from a hardware company to a growing services and software company, the larger part of the investments are in platform technologies and software content, he added.
the company is in talks with car manufacturers in Asia, Europe and North-America to sell content and traffic information, Goddijn said.
Fourth-quarter net income fell to 51.7 million euros from 73 million euros a year earlier, the Amsterdam-based company said in a statement. That beat the average estimate of 43.7 million euros in a Bloomberg survey.
TomTom plans to increase expenditure in 2011, primarily in development and commercial activities. Operating expenses in 2010 amounted to 558 million euros, an increase of 9 percent from 2009.
Sales in the fourth quarter fell 3 percent to 516 million euros. Consumer business sales dropped 9 percent to 406 million and automotive revenue rose by 52 percent to 55 million euros.
the Dutch company said Feb. 14 that navigation company Route 66 started a mapping and navigation application for Google Inc.’s Android handset system using TomTom’s maps. TomTom also said it will provide a new navigation system for the Lancia Ypsilon car.
Commenting on takeover speculation, Goddijn today repeated TomTom’s strategy is to grow as an independent company.
– With assistance of Martijn van der Starre in Amsterdam. Editors: Simon Thiel, Robert Valpuesta.
To contact the reporters on this story: Maaike Noordhuis in Amsterdam mnoordhuis@bloomberg.net.
To contact the editor responsible for this story: Vidya Root in Paris at vroot@bloomberg.net
TomTom Falls 11% on ‘Broadly Flat’ Earnings Forecast