Digital mapping company TomTom will probably lose some business in future as a result of Google’s deal with carmakers Renault, Nissan and Mitsubishi, TomTom’s finance chief said on Wednesday
Carmakers opting for Google Maps would have an impact on TomTom’s order flow, CFO Taco Titulaer told Dutch news agency ANP, although that would not directly hit revenues immediately, as it takes time for orders to translate into sales.
“Our order inflow from automotive was worth around 400 million euros ($468 million) last year. Our revenues from automotive are around half that number this year,” Titulaer said in an interview with ANP.
Carmaking alliance Renault, Nissan and Mitsubishi announced on Tuesday that they would use Google’s Android operating system for dashboard entertainment and information systems in their vehicles, in a potential blow to TomTom, which supplies digital maps to Renault and other major car manufacturers.
TomTom shares, which dived 24 percent on news of the deal on Tuesday, were down by a further 6.5 percent to 6.01 euros by 1015 GMT on Wednesday.
“The announcement adds to the uncertainty of the long-term case for TomTom,” ING analysts said in a note published on Wednesday. “The key risk is that other clients could also move to Google in the future.”
Titulaer would not give an indication of the impact of Google’s deal on the future profitability of TomTom.
The Dutch company, which made its name in the beginning of the 2000s with the introduction of popular personal navigation devices, is already facing shrinking sales as its market has faltered in recent years with the advent of smartphones.
The company said in July that it expects sales to fall almost 10 percent this year to around 825 million euros, although it also forecast adjusted earnings would rise 15 percent to 0.30 euros per share this year, helped by cost cutting.
($1 = 0.8551 euros)
(Reporting by Bart Meijer; Editing by Jason Neely and Susan Fenton)