By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Changes in the portable GPS and personal navigation device (PND) markets were illustrated in Garmin’s and TomTom’s financial reports.
Garmin reported its net earnings for the fourth quarter were cut nearly in half compared with last year’s high-flying fourth quarter for the navigation segment.
The company reported net earnings of $157.7 million for the quarter ending Dec. 27, 2008, compared with $307.3 for the period last year, citing a challenging economy.
Total revenue declined 14 percent to $1.048 billion, compared with $1.217 billion last year.
Automotive revenues declined 17 percent to $828 million for the fourth quarter while outdoor GPS increased 5 percent to $120 million. Garmin’s aviation segment fell 5 percent to $67 million and the marine segment revenue was flat at $33 million.
Although the PND market has slowed, Garmin experienced unit growth in North America and Asia for the fourth quarter and reported a 35 percent global market share at the end of the third quarter, which it believes increased during the fourth quarter.
TomTom agreed with Garmin and predicted a flat portable GPS market this year. TomTom said it expects 17 million PNDs will sell in North America in 2009, the same level it expected for last year, although 2008’s final tallies have not been announced.
TomTom also reported a significant loss of $1.3 billion in its fourth-quarter 2008 results, reflecting a write-down on the acquisition of Tele Atlas last year for $4.3 billion. TomTom said it took the one-time impairment charge because “the worsening macro environment means that currently we cannot sustain the full valuation of the acquired business of Tele Atlas as established at the time of the acquisition,” according to its quarterly report. The company said, nevertheless, Tele Atlas remains “core to the strategy” of TomTom.
Excluding the $1.3 billion write-down, TomTom reported a net profit of the U.S. dollar equivalent of $89 million for the quarter, ended Dec. 31, 2008, down from $127 million for the quarter a year ago. Revenue was $674 million for the quarter, compared with $888 million a year ago.
Tele Atlas revenue alone declined 11 percent for the quarter to $110 million and TomTom’s revenue, excluding Tele Atlas, declined 25 percent for the quarter to $603 million, down from $808 million for the year-ago quarter.
TomTom’s PND sales for the fourth quarter were 4.4 million units, up 4 percent from the year-ago quarter, and sales for the full-year 2008 were 12 million worldwide. The company said it expects to sell between 11 million and 12 million PNDs for 2009 and that its market share continues at 23 percent in the U.S. and 46 percent in Europe.
TomTom further announced it hopes to cut $77 million in costs in layoffs and reduced marketing and other expenses.
Cash and cash equivalents were reported at $408 million at the end of the quarter, with debt at more than $1.4 billion .
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