Tomtom delivered better than expected financial results today, with increases in both total revenue and net operating margin. They've continued to reduce debt, altho it's still quite high, and had success in finding ways to cut costs. Well done!
Now for a couple of worrisome areas that they'll need to deal with sooner rather than later. TeleAtlas continues to slide. Map license numbers are down 25%, total revenue is down again, advertising budget for them has been cut. Outside of sales directly to Tom/tom, they're continuing to lose ground. I see little chance of them ever earning back TomTom's investment. Not a good sign at all. Avoiding another write-down in value may be impossible.
Another area of concern is the erosion of their primary market, Europe. Overall PND sales down significantly there, and prices, especially in North America, still can't be stabilized. TomTom managed to sell nearly twice the Holiday units as last year, yet barely improved total revenue. With their primary revenue stream to be pnd's for the near future, and Garmin working aggressively to protect their primary market, North America, it's going to be very tough to have a repeat performance in results this year.
Third category: Research and Development. A very poor commitment to new models and technology IMO, tho TomTom drags out a comparison to 3rd qtr 09 to show an increase in their research. Actually down significantly compared to '08, which was also poor. To stay competitive, this commitment needs to increase, and quite a lot. Their big rival has made major investments in new technology this past year, even opening a additional research facility in Raleigh recently. Tomtom needs to substantially increase their R&D to roll out new pnd features, At the same time move as fast as possible away from reliance on pnd hardware sales and into services and software, and developing better tech-sharing partnerships. Their moves so far into these areas have not been as successful as I expected them to be, looking like a lack of full commitment to a mobile plan, while their pnd designs have stagnated.
I'm not yet convinced they think they know where they're going. Just my take.
Now for a couple of worrisome areas that they'll need to deal with sooner rather than later. TeleAtlas continues to slide. Map license numbers are down 25%, total revenue is down again, advertising budget for them has been cut. Outside of sales directly to Tom/tom, they're continuing to lose ground. I see little chance of them ever earning back TomTom's investment. Not a good sign at all. Avoiding another write-down in value may be impossible.
Another area of concern is the erosion of their primary market, Europe. Overall PND sales down significantly there, and prices, especially in North America, still can't be stabilized. TomTom managed to sell nearly twice the Holiday units as last year, yet barely improved total revenue. With their primary revenue stream to be pnd's for the near future, and Garmin working aggressively to protect their primary market, North America, it's going to be very tough to have a repeat performance in results this year.
Third category: Research and Development. A very poor commitment to new models and technology IMO, tho TomTom drags out a comparison to 3rd qtr 09 to show an increase in their research. Actually down significantly compared to '08, which was also poor. To stay competitive, this commitment needs to increase, and quite a lot. Their big rival has made major investments in new technology this past year, even opening a additional research facility in Raleigh recently. Tomtom needs to substantially increase their R&D to roll out new pnd features, At the same time move as fast as possible away from reliance on pnd hardware sales and into services and software, and developing better tech-sharing partnerships. Their moves so far into these areas have not been as successful as I expected them to be, looking like a lack of full commitment to a mobile plan, while their pnd designs have stagnated.
I'm not yet convinced they think they know where they're going. Just my take.
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