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TomTom Revises PND Outlook

Amsterdam, The Netherlands — TomTom announced it will report lower sales for the first quarter than previously expected, due to lower average selling prices (ASPs) in personal navigation devices (PNDs) and to European retailers cutting back on inventory.

TomTom said it reduced prices in the channel earlier than planned during the first quarter and shipped approximately 2 million PNDs worldwide. In a conference call today, however, TomTom CEO Harold Goddijn said the market is still healthy.

“The markets continue to grow very strongly … 40 percent growth for Europe and 100 percent for North America. So demand is there … I don’t think there is any evidence of saturation … We’re not worried about that. The lower numbers coming in are a function of [European] retailers de-stocking. It’s not TomTom specific — it’s not even PND specific — it’s a generic desire of retailers to shorten their balance sheets. It made it difficult to sell in the first quarter,” Goddijn said.

TomTom’s U.S. retail sales in the first quarter were slightly above expectations, while European retailers fell short. But ASPs are lower in the United States than in Europe, so TomTom’s overall revenues declined, said Goddijn.

TomTom also told analysts that dealers in the first quarter were backlogged in inventory of lower-priced PNDs. “It’s a quarter where you have existing stock you’re selling through as new products come in,” said a spokeswoman. Inventory levels have returned to low levels, so margins are expected to increase as higher priced PNDs begin to fill the channel, said TomTom, pointing to a similar situation in the first quarter in 2006.

For the full-year 2008, TomTom will maintain its guidance of 14 million to 15 million unit sales of PNDs, but it lowered its annual revenue expectations.

TomTom plans to announce the full first-quarter 2008 results on April 23.