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TomTom Reports Higher Q2 PND Sales

Amsterdam, The Netherlands–TomTom reported a 70 percent gain in unit sales of personal navigation devices (PNDs) for the second quarter ended June 30.

The performance squashes analyst fears that PND sales would fall in a unsettled economy. In addition, the company said it will introduce more high-end PNDs in the U.S. later this year, as it seeks to counter the trend toward entry level product.

The company, yesterday, reported stronger than expected second quarter results after selling 3.1 million PNDs, with expectations to sell between 14 and 15 million units for the full year.

Pro forma revenue that includes Tele Atlas, acquired in June, was $771 million, up 12 percent from $685 million a year ago. These figures treat Tele Atlas as if it were consolidated with TomTom as of January 2007.

Net profit for the quarter was $82.5 million down 24 percent from $107.8 million for the year ago quarter.

CEO Harold Goddijn noted, “We’re encouraged that consumer demand held up very nicely in light of all the economic developments.”

TomTom also said average selling prices (ASPs) rose by 12 percent from the first quarter although they are still down by 33 percent from the period a year ago. The company expects ASPs to see a “high 20s to 30” percent decrease for the full year compared with last year.

For the industry, the company expects PND sales of 20 million each for Europe and North America this year, up from a combined 26 million in 2007.

Goddijn said that the purchase of Tele Atlas, one of the only two current GPS map makers, helps position TomTom to be a player in many areas of navigation including GPS on cellphones and in-dash devices. He said, “The pricing between TomTom and Tele Atlas is at arms length and will continue to be at arms length and fair to everyone else.”

The purchase of Tele Atlas is expected to result in cost savings to the two companies of between $40 million and $48 million through 2009.

While analysts say that the worldwide balance in PND and mobile phone GPS sales could tip in favor of mobile phones by the end of this year or next year, Goddijn said, “We don’t expect it to be a threat now or in 2009 … We see further proliferation of digital maps through a variety of devices and we can play there. We think the PND form factor is far superior to the user experience you can deliver on a mobile phone. People are used to that and it will be a very important category going forward.”

Goddijn said TomTom’s advanced technologies, such as MapShare and HD Traffic, are seeing “good results.” More than 10 percent of its unit sales now come with an HD Traffic subscription, and, “We see those levels going up very rapidly in the second half of the year,” he said. Goddijn also said that 8 million people are downloading map corrections from MapShare, and the company receives approximately 10,000 reports on map improvements every day, or 3 million to date.  

MapShare lets users contribute to map updates. TomTom’s HD Traffic receivers deliver more detailed traffic reports. Like the Dash Express, an HD Traffic receiver collects road speed information as you drive, aggregates the reports and sends them back to all HD Traffic users. While MapShare is available in the United States, HD Traffic has yet to launch beyond select areas in Europe.

TomTom said the U.S. represented 24 percent of total pro forma revenue for the first half of the year (including Tele Atlas) while Europe represented 73 percent.

Goddijn noted that while most PND sales are currently from first time buyers, by 2009 replacement sales will begin to have a “meaningful effect” on the market.

Finally, TomTom reported it expects to launch a more intense effort to gain market share in the United States this year.