Dutch navigation company TomTom posted a €2m loss in the first quarter of 2012, adding to scepticism about the company’s future as the market for personal navigation devices shrinks due to competition from smartphones.
Revenues fell to €233m, down 12 per cent compared with a year earlier. Earnings before interest, taxes, depreciation and amortisation (ebitda) fell to €28m, down 41 per cent.
“The economic headwind in southern Europe impacted consumer and automotive revenue in the quarter,” Harold Goddijn, chief executive, said in a statement.
He reiterated the company’s full-year guidance of revenue of around €1.1bn and adjusted earnings per share of roughly €0.35.
He noted that a problem with third-party software that caused some portable navigation devices (PNDs) to stop working on March 31 had been fixed.
TomTom’s strategy is to shift from PND sales towards licensing its software and data, navigational services for businesses, and built-in automotive devices. Margins in the software and services side are much higher than those for hardware.
But built-in devices have been pressured as auto companies themselves have faced shrinking sales. Revenue from automotive and licensing fell by €2m each, while business solutions revenue was up €2m.
The overall market for PNDs, where the company continues to draw the bulk of its revenue, shrank from 4.5m to 3.4m units from a year earlier, the company said. Its market share remained stable at roughly half the European market and a quarter in North America.
Earnings per share fell to -€0.01. Shares were up 1.4 per cent to €3.53 in morning trading on the Amsterdam exchange, against a 1 per cent rise in the AEX index.