TomTom falls after profit warning

TomTom has cut prices ahead of a series of product launches

Shares in TomTom fell by 14% after the Dutch satellite navigation company issued a profit warning.

TomTom said it expected annual sales of between 1.8bn and 2.0bn euros ($2.8bn- $3.2bn; £1.4bn-£1.6bn), down from its February estimate of 2.0-2.2bn euros.

The company blamed having to make earlier-than-expected price cuts ahead of a series of product launches.

TomTom said new products would drive sales growth for the rest of 2008, but not enough to make up for a slow start.

It has kept the number of devices it expects to ship this year unchanged, confirming the extent of the price cuts.

Map deal

"The profit warning puts a major dent in the investment case, as it appears that the company is no longer able to control the average selling price decline while keeping revenues and the margins at the planned level at the same time," said Eric de Graaf, an analyst at Petercam.

TomTom is in the process of acquiring map-maker Tele Atlas, although there has been some concern among analysts that falling profitability could cause problems for the deal.

"Servicing the debt for the planned Tele Atlas acquisition could even become problematic," Mr de Graaf added.

But the company maintained that it is committed to the acquisition and expects it to be cleared by the European Commission.

Its shares ended the day down 3.65 euros, or 13.8% at 22.78 euros.