AMSTERDAM (Reuters) - Dutch navigation device maker TomTom said on Wednesday it was broadening its revenue base faced with competition from free navigation on smartphones and declined to comment on possible takeover bids.
The company said its third-quarter net profit took a hit due to a currency charge but maintained its full-year outlook despite increased competition from free navigation software from Google and Nokia smartphones.
The personal navigation device (PND) industry, led by TomTom and Garmin, has been hit badly by competition from navigation-enabled smartphones.
Garmin CFO Kevin Rauckman estimated last month that smartphone competition was deflating annual PND sales.
Chief Executive Harold Goddijn said the company was happy with its performance in the quarter.
“We are focused on broadening our revenue base and on rolling out high quality content and services to our customers and I am pleased with the progress we are making,” Goddijn said in a statement.
TomTom Chief Financial Officer Marina Wyatt declined to comment when asked on a conference call if TomTom was no longer in talks with any companies wanting to take it over.
TomTom, which some analysts see as a takeover target for Microsoft, Google or Samsung, has turned down a few offers, Goddijn said in a newspaper interview at the start of the month.
“We feel confident of the strategy as an independent company,” Wyatt told reporters.
Maurice Mureau, asset manager at Keijser Capital said phone makers, such as Samsung and HTC, would be more logical candidates to buy TomTom than Google or Microsoft, although he did not rule out the two U.S. firms as buyers.
“It could well be that they (TomTom) are currently in takeover talks but are not allowed to talk about it,” Mureau said.
TomTom which makes personal navigation devices (PND), and its main competitor Garmin have come under pressure from Nokia and Google, which offer free navigation features on their on their GPS-enabled smartphones.
A continued drop in average selling prices of PNDs due to increased competition — also from navigation systems built directly into cars — has also weighed on margins, and TomTom has been shifting to sell more traffic services via its PNDs.
The firm also announced a phone location and navigation deal with Taiwan’s HTC on Wednesday, and said it was looking to generate more revenue from live services, traffic and weather information and speed camera information.
TomTom kept its 2010 outlook for revenue and earnings per share to be flat from 2009, when revenue was 1.48 billion euros and earnings per share were 0.47 euro.
The firm’s revenue in the third quarter increased by 3 percent to 375 million euros, beating a mean estimate of 357 million euros in a Reuters poll of 12 analysts.
However, net profit fell 37 percent to 19 million euros, due to a 20 million charge, mostly related to currency effects, missing a mean estimate of 25.1 million in the poll.
TomTom shares were down 0.5 percent at 5.99 euros by 0950 GMT after sliding nearly 6 percent after market open. The Amsterdam blue chip index was down 0.8 percent.
“Revenue was alright, a bit better than expected but because of currency effects the net profit was disappointing. I think that’s what weighing on the shares at the moment,” Keisjer’s Mureau said.
Additional reporting by Gilbert Kreijger; Editing by Karen Foster