While TomToms revenues are still down YoY (-15%) and QoQ (-1%), the net result has improved, now at 31 million Euro, a 42% increase compared with Q2, but still 48% lower than Q3 2008. This increased profitability is the result of severe cost cutting measures, including redundancies, to reduce operating expenses by 26 million.
With growth prospects for the PND segment remaining dim full year 2009 PND shipments estimated by TomTom at 15 million in Europe and 17 million in the US and TomToms LIVE connected PND range unlikely to turn the tide any time soon - , TomTom was happy to highlight that non-PND activities now account for 30% of the revenues compared to 20% in Q2, boosted by the launch of iPhone navigation software, with 80000 downloads to date, and continued activity in the OEM sector, with Fiat joining Renault as a TomTom navigation partner.
The communication that the average PND price will continue to decrease sent TomToms share price down up to 20%, the worse decrease in 2 years. The announcement Google will launch free turn-by-turn voice directions, initially on Android phones, is unlikely to make the financial community reflect more positively on TomToms valuation as it casts doubts on TomToms long term prospects in the phone-based navigation segment.