TomTom, Europe's leading vendor of portable navigation devices (PND), reported an unexpected net loss of €489 million for the second quarter. The company, which made a profit of €34 million in the same period a year ago, was forecast by analysts polled by Bloomberg to be on track for a €10.7 million profit.
The company said its second quarter performance was significantly hurt after writing down goodwill of €473 million from the acquisition of Tele Atlas in 2008. TomTom CFO Marina Wyatt said in a conference call with analysts that Tele Atlas map sales are dragged down if demand falls for PNDs.
Industry observers noted that consumers are increasingly using smartphones and free apps such as Google Maps in place of expensive PNDs, and TomTom is attempting to rebuild its revenues from maps and services from systems that are integrated into cars and vehicles. These include a premium live navigation service offering updates on traffic and road conditions as well as directions.
Saless of the company's technology to the automotive industry have climbed 34 per cent to €60 million in the quarter. TomTom CEO Harold Goddijn said the company is talking with car manufacturers around the world about possible contracts for in-built navigation systems.
Commenting on the latest second quarter results, Eric de Graaf of Crédit Agricole Cheuvreux, told the Financial Times: "It's clear that the company is not yet done falling."
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