TomTom shares fall 14% following profit warning
Date: Tuesday, April 08 @ 21:06:33 UTC
Topic:
TomTom's share price fell 14% today following their first quarter results and an announcement of a revised profit forecast for the year. TomTom has revised its sales annual sales forecast down from a February estimate of €2.2 billion to €1.8 - €2.0 billion.
Despite huge market growth TomTom blamed their weak results on reduced inventory levels at their European retailers and reduced unit prices ahead of new product launched which happened earlier than expected.
Although TomTom continues to grow this news will cause investors to take stock, even with TomTom's strong market position it is clear that they are unable to control the declining street selling prices and margins are falling as a direct result.
TomTom still expects to ship 2.0 million PND's in Q1 2008 but this will generate revenue of €260 million - €270 million, lower than Q1 2007 with an operating margin falling to a single digit. The acquisition of TeleAtlas will doubtless further impact profit margins once it is cleared by the European Commission.
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