TomTom Q1 profit drop meets forecasts, shares stumble

By Niclas Mika

AMSTERDAM (Reuters) - TomTom (TOM2.AS: Quote, Profile, Research, Stock Buzz), Europe's largest maker of navigation devices, reported a steep drop in quarterly operating profit on Wednesday, in line with analysts' reduced expectations.

TomTom earlier this month cut its 2008 outlook and indicated that first-quarter sales had fallen from the year-ago quarter and its operating margin had tumbled.

Earnings before interest and tax (EBIT) fell to 9 million euros ($14.26 million) from 57 million euros a year ago, while the average forecast in a Reuters poll of 15 analysts was 10 million euros.

TomTom said it sold 2 million navigation devices in the first quarter for an average selling price of 117 euros.

It is the first time since the fast-growing company went public in 2005 that sales fell year on year, to 264 million euros from 296 million.

TomTom shares fell 3.8 percent to 21.76 euros by 0724 GMT following a 9.5 percent rise on Tuesday after industry and other sources told Reuters the company was expected to win unconditional EU approval to buy its main map supplier Tele Atlas (TA.AS: Quote, Profile, Research, Stock Buzz) in a 2.7 billion euro deal.

The shares are still down about 18 percent since the firm gave the first-quarter sales warning. They peaked at an all-time high of 68.15 euros in October.

TomTom, whose main rival is U.S. market leader Garmin (GRMN.O: Quote, Profile, Research, Stock Buzz), repeated it was committed to the Tele Atlas acquisition and was looking forward to a positive outcome of the review by the European Commission.