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TomTom: North American PND Sales Off 19%

4/27/2011 10:45:51 AM Eastern

Amsterdam - Retail-level unit sales of portable navigation devices (PNDs) in North America fell 19 percent during the first quarter, more than previously forecast.

Unit sales were 2.1 million units compared to the year-ago period, TomTom said in releasing its first-quarter financial report.

Nonetheless, TomTom said it increased its North American market share to 24 percent from 22 percent.

In Europe, first-quarter industrywide PND sales fell 14.9 percent to 2.4 million units from a year-ago 2.6 million, with the combined North American and European markets declining 15 percent, TomTom said.

The company said it previously expected the North American and European PND markets to decline by 10 to 15 percent but that in March, the North American decline exceeded that range, and the greater-than-expected declines continued in North America through April.

CEO Harold Goddijn cited four primary reasons for the PND market's decline, but he said competition from navigation applications on smartphones "is not a major factor." The other three reasons are "some level of saturation," a growing amount of consumer dollars market being spent on tablets and smartphones, and continued low consumer-confidence levels.

In other comments, CFO Marina Wyatt said PND average selling prices are seeing "increasing stabilization" and that ASPs fell 5 percent last year. She said she expects the rate of decline to "flatten off over time."

No supply problems resulting from the Japan earthquake and tsunami contributed to the market's unit-sales decline in the quarter, and Goddijn. "It doesn't look like we'll be affected in any material way," he said of TomTom's overall business.

In its first quarter, TomTom reported that its sales of consumer products, mainly PNDs, fell 16 percent to 157 million euros ($230.3 million based on exchange rate of 68 cents to the euro) but that consolidated sales fell only 1 percent to 265 million euros ($388.7 million). Those sales include navigation-device sales to automakers and business as well as revenue from licensing, including map licensing.

TomTom's net income rose 243 percent to 11 million euros from a year-ago 3 million euros.

Because of the faster-than-expected first-quarter decline in the PND market, which accounts for the majority of company sales, TomTom expects its full-year consolidated revenues to be lower than previously forecast, coming in at between 1.43 million euros to 1.48 million Euros ($2.09 billion to $2.16 billion).

In the first quarter, TomTom said it launched its Nike+ GPS-equipped sports watch, new PNDs for professional truckers, and its flagship GO and midrange Via series of PNDs for consumers.

Earlier this year, TomTom said industrywide North American PND sellthrough fell 17 percent to 15.2 million units from 2009's 17.8 million and that fourth-quarter 2010 North American unit sales fell 32 percent to 6.5 million from fourth-quarter 2009's 8.6 million.

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