TomTom Looking for Navigation As Profits Plummet

It seems navigation device-maker TomTom is looking for some better direction, as the company’s first-quarter performance suffered a massive fall in net profits.

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The Dutch company had warned of a first-quarter slump earlier this month, when it predicted sales would come in at $AUD 430 million, but the final result of $AUD420 million failed to disguise the huge 84 per cent fall in profits, the worst result since the company began trading in 2004.

From a global perspective, the price tag in the navigation device market has fallen as the competition gets aggressive, with TomTom’s American rival Garmin also engaging in tit-for-tat price cuts.

To add to its woes, TomTom, the world’s largest maker of car navigation equipment also said that European retailers were cutting down on stocks, leaving the company with piles of unsold units and forcing more price cuts to boost demand.

However, this inventory reduction was a “one-off effect that you will not see repeat itself” in the second quarter, Chief Executive Officer Harold Goddijn said, adding that he’ is “looking forward” to a “good” second quarter.