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Last Updated: Thursday, 21 February 2008, 18:43 GMT
TomTom hit despite strong sales
A TomTom satellite navigation system on the dashboard of a car
Prices of TomTom's devices are falling
Shares in Dutch firm TomTom have lost ground on fears that falling prices of its satellite navigation devices (sat-nav) will hurt profits.

TomTom said sales had doubled, although its profit margin fell, as the average selling price dropped to 141 euros (106; $207) from 184 euros.

TomTom's margins have been squeezed as it expands in the more competitive US market, the home of rival Garmin.

Shares in TomTom ended the day 9.3% lower at 34.40 euros.

Garmin warned on Wednesday that intense competition could cut sat-nav prices by about 20% in 2008, pressuring its profit margins.

Stiff competition

Specialist makers such as TomTom and Garmin are also facing competition from mobile phone companies, such as Nokia, that are adding sat-nav devices to their products.

TomTom said it sold 4.3 million navigation devices in the final three months of 2007, up from 2.2 million in the third quarter and 1.9 million a year ago.

However, its gross margin dropped to 42% from 49% in the third quarter.

"A large proportion of our revenue is in the United States, where pricing conditions are slightly more aggressive than in Europe," said TomTom Chief Executive Harold Goddijn.

Its fourth-quarter net profit was 107m euros, up 8% from the third quarter.

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