UPDATE: TomTom's Transition Not Progressing Quickly Enough

The diversification of Dutch navigation-equipment maker TomTom NV (TOM2.AE) isn't progressing quickly enough, but the underlying fundamentals of its business remain sound, Chief Executive Harold Goddijn said in an interview Friday with television broadcaster CNBC.

"We need to get through the transition. It's not going fast enough, but in the meantime the underlying fundamentals are OK," Goddijn said. "It's hard work, but we'll get there and we'll have a broader-based company going forward."

TomTom, which competes with Cayman Islands-based Garmin Ltd. (GRMN), has suffered as demand for its devices has fallen because consumers are increasingly navigating with smartphones and free applications, such as Google Inc.'s (GOOG) maps.

TomTom is seeking to boost its growth with products other than personal navigation devices. It has deals with car makers and sells its own applications for smartphones. TomTom also is diversifying into other products, such as devices that monitor sports, and offers subscription services to the people who own its devices.

"It's very difficult to predict and say what the world will look like in five years from now, but I think fundamentally what we're doing is sound. We get traction in new businesses, so I think we need to get through this transition," Goddijn said.

On Thursday, Corinne Vigreux, TomTom's managing director, said she expects the decline in sales of its personal navigation devices to stabilize as its customers start replacing devices with fancier ones.

TomTom's shares have lost over 65% of their value this year as the company had to cut its sales guidance twice. In the second quarter, results were hit by a EUR512 million impairment charge on mapping unit Tele Atlas, which it bought in 2007 for EUR2.9 billion. TomTom now has guidance for full year sales of between EUR1.23 billion and EUR1.28 billion and earnings per share of EUR0.25 to EUR0.30, excluding impairments.

When TomTom was listed in 2005 it was valued at close to EUR2 billion, or EUR17.50 per share. It shares reached an all-time high of nearly EUR70 at the end of 2007, but have spiralled downward since because the company overstretched its balance sheet when it bought TeleAtlas.

It had to issue new shares in 2009 to raise over EUR400 million to ease its debt burden. Dutch investment fund Cyrte Investments BV and Janivo Holding BV bought an 8% stake for EUR6.12 per share, while TomTom's management also still owns a large stake in the company.

At 0903 GMT, TomTom's shares traded up EUR0.02, or 0.6%, at EUR2.72, giving it a market cap of EUR603 million.

-By Robin van Daalen, Dow Jones Newswires; +31 20 571 52 01; robin.vandaalen@dowjones.com

(Inti Landauro in Paris contributed to this article.)

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