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TomTom: Q2 PND Volume In North America Down 27%

Amsterdam, The
Netherlands – Industrywide retail-level unit sales of portable navigation
devices (PNDs) in North America fell 27.3 percent in the second quarter to 2.4
million units following a 19 percent first-quarter decline to 2.1 million


said in releasing its second-quarter
financial report.

The company said
its North American unit share fell to 21 percent in the quarter from the first
quarter’s 24 percent, largely because the company scaled back its aggressiveness
in the low end of the market, said CEO Harold Goddjin. As a result, the company
was able to maintain its average selling prices in the second quarter compared with
the year-ago quarter, he noted.

TomTom attributed
declines in the North American and European markets to weak CE markets and
retail channels that have continued to reduce inventory levels. Goddjin
attributed retailers’ reductions of PND inventory levels to a general trend to
scale back CE purchases to shorten inventory cycles. “I don’t think we’re
losing shelf space,” Goddjin said of PNDs.

Industrywide PND
retail unit sales fell in Europe by 45 percent in the quarter to 2.7 million

Because of the PND
market’s rapid decline, TomTom said it expects to make cost cuts that it will
announce in its third-quarter financial report “to maintain a healthy cash flow
whilst at the same time continuing to invest to support our growing revenue
lines.” Those lines include OEM automotive sales, commercial sales, map
licensing and the like.

A total of 67
percent of company revenues in the second quarter were from the consumer group,
consisting largely of PND sales but excluding OEM sales to automakers.

The company’s consumer-market
sales fell 23 percent in the quarter to 209 million euros ($300.2 million) and
fell 20 percent in the half to 365.8 million euros ($525.4 million). Combined
sales of all product segments fell 13 percent to 363 million euros ($521.4
million) and in the half by 8 percent to 579 million euros ($831.6 million).

Because of the PND
sales decline, the company is taking a one-time impairment charge on goodwill
and other intangible assets of 512 million euros ($735.3 million) in the second
quarter, pushing the company into the red with a first-half 489 million euro ($702.4
million) operating loss and a first-half net loss of 512 million euros ($735.3
million). Without the charge, TomTom would have posted net profit of almost 23
million euros ($33 million) in the first half compared to the year-ago 67
million euros.

Exchange rates are
based on 1 euro equaling $1.44.