Lowered outlook for the full year
Compared to the same quarter last year (pro forma with last years’ Tele Atlas results)
revenue is down 10%. TomTom also lowered its financial outlook for the year, expecting reported revenue of “between €1.75 billion and €1.85 billion”. The PND revenue should be between €1.6 billion and €1.7 billion (12 to 13 million units in total). Until now TomTom’s forecast for the whole market was 20 million units both in Europe and in the United States; it as been reduced to 18 million in each region.
Tele Atlas revenue for the full year is expected to be €310 million.
TomTom also announced it has renegotiated its debt, a topic that was very important for the financial community, several analysts having explained concerns about the uncertainty of refinancing the debt linked to the Tele Atlas acquisition in these difficult times on the capital markets.
TomTom’s PND unit volume only increased 17% between the third quarter 2007 and the third quarter 2008 while the average selling price fell 26%; as a result the revenue decreased 12%. However, the product mix is getting better in Europe explained TomTom’s CFO Marina Wyatt: the entry level TomTom ONE is now only doing 50% of the business. However, in the United States the bulk of the volume remain made by entry level devices.
TomTom wants to remain optimistic about the future of the PND market, explaining that North America and Europe combined grew 40% year on year in volume during the third quarter. Nevertheless, there is indeed a real slowdown: last year TomTom’s unit sales growth between the second and the third quarter was 16.3%, this year it is minus 17.6%. Despite that TomTom remains confident about the fourth quarter, especially in the United States where the Dutch company expects to raise its market share with promotional activities around Black Friday. A $99 TomTom ONE has been already seen in a Sears leaflet.
TomTom’s CEO Harold Goddijn said HD traffic subscribers are approximately 40,000 today with connected devices in the Netherlands. His target is to have 1 million connected devices by the end of 2009.