TomTom results better than expected

TomTom, the Dutch maker of navigation devices for cars, is doing better than expected.

Despite a substantial decline in turnover, it managed to still make a profit, according to second-quarter figures reported on Wednesday. The navigation company earned 21 million euros, after losing 33 million in the first quarter.

TomTom has been suffering on all sides, as the economic downturn coincided with a period of sharp price erosion of its main product under competition from US and Asian rivals. On top of that, the Amsterdam-based company has been labouring under a heavy debt load incurred during its 2.9 billion euro acquisition of digital mapmaker Tele Atlas last year.

TomTom saw its European market share rise to 45 percent, but is dealing with heavy competition from the American Garmin on the US market. Fewer than one in five car navigation devices in the US are TomToms. The overall market in the US is growing, while European demand is down. The average selling price was reduced to 112 euros, 14 percent lower than a year ago.

CEO Harold Goddijn said the market for navigation equipment is developing "in line with our expectations", with the usual peak in spring.

TomTom said that, because of a reduced demand in navigation systems, it lowered its costs by 18 percent by laying off 115 people, 7 percent of its workforce.

TomTom paid its net debt down by around 50 million euros in this quarter, leaving it with 1.01 billion. More significantly, the company also sold 400 million euros of new shares in an offering last week, 169 million of which came from the company's founders, including Goddijn. The offering diluted investors' stakes but put the company on better financial footing. TomTom will use the money raised to further pay down debt further.

The company meanwhile hopes to diversify its product range by offering a custom navigation system for Renault car makers and a navigation system application for Apple's iPhone.