Updated from 10:10 a.m. EDT
Digital navigation-device maker
lowered its first-quarter sales forecast Tuesday, sounding an alarm for others in the sector.
Netherlands-based TomTom said it expects first-quarter revenue in a range of 270 million euros to 280 million euros, or $425 million to $440 million, compared with 296 million euros, or $465 million, in the year-ago period. Analysts currently expect revenue to come in at 341 million euros for the quarter, according to Thomson First Call.
The reduction in TomTom's first-quarter outlook follows price cuts leading up to the introduction of new models, as well as retailers reducing inventory, especially in Europe. Based on the revised first-quarter forecast, the company said it now expects full-year 2008 revenue in a range of 1.8 billion euros to 2.0 billion euros, which is below the Thomson First Call average estimate of 2.14 billion euros.
Shares of TomTom dropped 13% in overseas trading. Rival
(GRMN - Get Report)
fell more than 6.3% to $49.36 on comments from TomTom that all personal-navigation device makers will see softening sales.
"That's not TomTom-specific, it's not even PND-specific, it's a generic desire of retailers to shorten their balance sheets," TomTom CEO Harold Goddijn said during a conference call. "I don't think it's a slowing down of the market overall."
TomTom said it is still going forward with its planned acquisition of digital mapmaker
. The deal, valued at 2.9 billion euros, or $4.3 billion, is on hold as the European Commission has yet to give its approval.
Last week, shares of Garmin dropped 3.5% on a
report that a company executive said first-quarter revenue would drop between 40% and 50% from the previous quarter, which benefited from holiday sales.
At the time,
analysts said that Garmin CFO Kevin Rauckman
may have been misquoted. Additionally, Garmin senior media relations specialist Jessica Myers said Garmin's "guidance has not changed since the fourth-quarter earnings call."
TomTom is set to report earnings on April 23, and Garmin will post quarterly results a week later.
, which is planning to be acquired by
(NOK - Get Report)
, was edging down 0.3% to $65.84.
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