Dutch sat-nav maker TomTom is switching its focus away from the cash-bleeding personal navigation devices (PNDs) that made it a household name to its car and mapping services to restore growth and profits.
Best known for its PNDs used by car and truck drivers, TomTom also sells real-time traffic services through its internet-connected devices and smartphone apps, mapping data to businesses, as well as navigation units which are built into cars, including various Renault, Fiat and Mazda models.
TomTom’s biggest division, and biggest bleeder of sales and profits, is the consumer PND unit, with growth at the other units still far from offsetting losses at PNDs.
The firm has struggled for months to overcome slumping demand in PNDs as consumers opt for free or cheap navigation software as well as cooler gadgets like smartphones and tablet computers.
TomTom reported a 10 per cent fall in third-quarter sales to €336m (£293m), dragged down by the consumer PND unit, which reported a 23 per cent fall. But overall sales beat analysts expectations.
It reported a 50 per cent rise in third-quarter net profit to €29m, up from €19m a year earlier, due in part to a currency gain.
To the relief of investors, who have seen TomTom’s shares plunge from a high in 2007 of €56.32 to a September 2011 low of €2.40, TomTom finally said yesterday it will focus on driving growth in more promising areas including in-built navigation systems for cars, as well as mapping and live traffic services. Its shares rallied 18 per cent to €3.62 yesterday.
City A.M. Reporter