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TomTom profit down 48 percent in Q3

TomTom profit down 48 percent in Q3

TomTom NV, the Dutch maker of navigation devices, reported Wednesday a 48 percent fall in net profit for the third quarter, due largely to price cuts to attract buyers amid the economic downturn.
Net profit was ⁈lion ($46.11 million), down from ⁈lion in the same period a year ago, but up slightly from the previous quarter. Sales fell 15 percent on the year to ⁈llion.
The company issued new shares in July to ease an unmanageable debt burden, so diluted earnings per share were down more sharply, 63 percent, to ⁈er share.
TomTom is the largest maker of GPS devices for cars, but is smaller overall than top rival Garmin Ltd. of the Cayman Islands.
Chief Executive Harold Goddijn said in a statement the third quarter earnings showed the company is now firmly profitable, in part due to cost-cutting.
The company said it doesn't see consumer demand for navigation devices worsening.
Sales were down 15 percent from a year ago, but fell by just one percent from the second quarter of 2009. Net profit was higher in the third quarter than in the second quarter _ but earnings per share were flat, because of the dilution.
Sales volumes were actually up 2 percent from a year ago, but average selling prices slumped 27 percent to ⁈
"The decline was driven by price decreases across a number of products, partly in anticipation of promotional activities in the fourth quarter," TomTom said.
Shares fell 4.1 percent to ⁈n early trading.
Net debt decreased to ⁈llion at the end of the quarter, from ⁈illion, mostly due to the ⁈llion share issue.
Analyst Eric de Graaf of Petercam Bank said the earnings were better than expected and raised his advice to "Buy" from "Add."
The company's agreements with its bank creditors "are no longer at risk, while the outlook suggests that markets are normalizing," De Graaf said in a note on the earnings.
TomTom's debt problems stem from its ⁈llion acquisition of digital map maker Tele Atlas, a purchase made last year after a takeover battle with Garmin.
TomTom considered the buy a necessity for strategic reasons but the debt drove it close to bankruptcy when the downturn came.


Updated : 2021-04-11 19:03 GMT+08:00