Big Earnings Jump at TomTom
Well, as previously reported, TomTom is doing well in the US, as they are the number two GPS brand in the mobile (automotive) segment. All that performance in the market translated into sales numbers and profits. Things are looking up for the TomTom folks who took a big gamble on the US market last year by launching an advertising campaign and getting distribution in outlets such as Best Buy.
Sales for last year were up 275% to 720 million Euros, with full year profit up 411% to 143 million Euros. So, how would you like a 411% increase in your profit last year. That’s what you get by launching high quality products into a huge market that is just exploding. TomTom claims a 25% share of the US market, and are claiming a 56% share of the European market. No wonder profits are up!
Tom Tom’s Chief Executive Officer, Harold Goddijn said, “2005 was a very exciting year for TomTom. We increased our revenues nearly four times and our profits by more than five times. The consumer market for portable in-car navigation took-off, driven by the success of integrated devices such as the TomTom GO range. A growing market inevitably attracts competition but despite many new entrants into the market we continued to lead the market in Europe. Sell through in the fourth quarter was very strong and was double that of the third quarter. According to GfK, the market research company, we extended our European market share in the fourth quarter to 56% measured in units.
We get a taste of things to come from the outlook statement issued with the earnings. TomTom said, “Revenues are expected to be stronger in the second and fourth quarters owing to seasonality and to the timing of new product introductions and investment in marketing.” We like the idea of new product introductions. The second quarter is a good time to launch, ahead of the summer driving season, likewise a good time to advertise. I would expect that the launch of the TomTom ONE in the US would be welcomed by the market. The low to mid tier will continue to drop in price, and will become increasingly important as a point of market entry for new GPS users.
Read More in: Earnings Announcements | TomTom GPS News
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Posted by Scott Martin at February 14, 2006 8:46 PM
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