TomTom hit by €2m loss as market shrinks

[greal]

[copy & paste, due to Financial Times' semi-restricted access, original here]

TomTom hit by €2m loss as market shrinks

Dutch navigation company TomTom posted a €2m loss in the first quarter of 2012, adding to scepticism about the company's future as the market for personal navigation devices shrinks due to competition from smartphones.

Revenues fell to €233m, down 12 per cent compared with a year earlier. Earnings before interest, taxes, depreciation and amortisation (ebitda) fell to €28m, down 41 per cent.

"The economic headwind in southern Europe impacted consumer and automotive revenue in the quarter," Harold Goddijn, chief executive, said in a statement.

He reiterated the company's full-year guidance for revenue of around €1.1bn and adjusted earnings per share of roughly €0.35.

He noted that a problem with third-party software that caused some portable navigation devices (PNDs) to stop working on March 31 had been fixed.

TomTom's strategy is to shift from PND sales towards licensing its software and data, navigational services for businesses, and built-in automotive devices. Margins in the software and services side are much higher than those for hardware.

But built-in devices have been pressured as automakers themselves have faced shrinking sales. Revenue from automotive and licensing fell by €2m each, while business solutions revenue was up €2m.

The overall market for PNDs, where the company continues to draw the bulk of its revenue, shrank from 4.5m to 3.4m units from a year earlier, the company said. Its market share remained stable at roughly half the European market and a quarter in North America.

Earnings per share fell to -€0.01. Shares were up 1.4 per cent to €3.53 in morning trading on the Amsterdam exchange, against a 1 per cent rise in the AEX index.

 

[mvl]

I listened to the conf call. Interesting tidbits:

- €13.5m charge this quarter to fix the GPS bug. TT removed all devices in the retail channel and reflashed them

- R&D expenses tend to be "lumpy" with new releases, and expected to be higher in 2Q2012. (my read: new releases coming in 2Q2012)

 

[canderson]

I wonder if TomTom will have any recourse with Broadcom (or whoever it was that supplied the GPS chipset firmware) to recover some part of the €13.5m? That's a boatload of cash if it was some little outfit that provided the 'glue' code for the GPS chip, but something that could be recovered from an outfit the size of Broadcom.

 

[Yesideez]

I will go for as long as I can without buying a smartphone.

I don't want one.

My mobile cost me £20 and doesn't even have bluetooth.

If I want a navigation device (which I do) then I'll buy a dedicated device.

I can't be the only one

 

[Andy_P]

I'm there with you, Yesideez!

I didn't even have a Bluetooth-capable mobile either until a few weeks ago, when I inherited my wife's old one (she got something flashy for free on her contract).

Typically, It's one that seems to have trouble staying synced to any of my TomToms!

 

[peebs24]

I am not surprised. The way TT treats customer problems it is no wonder people are voting with their feet!
It took TT almost a whole year to come up with a replacement for Radars in France - something that other manufacturers had in place for when the law changed.
It has taken almost two years for TT to correct a MPH/KPH look-up problem that was potentially VERY dangerous for users in the UK.
All this time we had virtually ZERO info or acknowledgement on our requests for info. What info we did get was totally erroneous or completely wrong! We were given dates that we completely missed or were immediately contradicted. I received a personally addressed email giving me a date for the release on the upgrade only to receive - just one day later - another email saying that the first email had been sent out in error!!!
TT have some excellent products but they are let down by what appears to be a Corporate philosophy that say "screw the existing customers - we already have their money!".

 

[artleknock]

Strange, I have had good experience with them. Couldn't have been more helpful with a problem that I had (finger trouble), even contacted me a few weeks later to check that everything was OK.

 

[peebs24]

Maybe for small "finger trouble" problems TT's CS are OK. The problems that I mentioned required software upgrades and the problem was that no-one seemed able to advise when, or even, if we were going to get our systems brought up to date (see TT's own forum).
The problem was not with the CS dept. I firmly believe that, like mushrooms, they too were being fed BS and kept in the dark.
That is what leads me to believe that it was a Corporate philosophy to simply ignore existing problems and only get around to fixing them when they had nothing better to do.
No company that I know of would have taken a year to release the French Danger Zones software up grade had they really put their mind to it. Particularly so when virtually ALL of their competitors had had the fix in place as soon as - or very shortly after - the law in France was changed.
The same was true of the MPH/KPH problem. This problem - again software related - was potentially extremely dangerous and yet, in spite of numerous complaints by existing customers, remained unresolved for well over a year.
Software problems simply do not take that long to resolve! Unless, of course, you ignore them until you have nothing better to do.
Overall, these problems were compounded by the fact that existing customers could not obtain any definitive information as to when, or even if, these problems were ever going to be fixed. Communications was TT's primary failing and has caused many people to vote with their feet!

 

[Andy_P]

It has taken almost two years for TT to correct a MPH/KPH look-up problem that was potentially VERY dangerous for users in the UK.

What's this ongoing problem please?

There were some problems with speed camera warnings being mis-calculated between mph and km/h, but that was ages ago (and IIRC the error was in the SAFE direction i.e. you got speed warnings at a lower speed than you should)

I don't know of any CURRENT issues like that.

 

[peebs24]

True both problems seem to have been solved recently although some people are still reporting difficulties.
The MPH/KPH problems was 'ages ago' and remained in place for 'ages'. In fact it was corrected with the same release as the Danger Zones in NOVEMBER 2012 - over a year after it was first reported. The error was NOT is any SAFE direction. People were reporting slamming on their brakes to avoid a false low speed warning on radars in the UK. There is no such thing as a safe direction!
My point was not the specific problems but rather the way TT handled them and in doing so needlessly upset many of their existing customers. A bit of communication would have gone a long, long way.

 

[Andy_P]

True both problems seem to have been solved recently although some people are still reporting difficulties..

Strange, I've not seen that on any of the user forums for a long time.

The error was NOT is any SAFE direction. People were reporting slamming on their brakes to avoid a false low speed warning on radars in the UK. There is no such thing as a safe direction!.

Hmm... I think I'd be blaming the drivers for stupidly depending on a mechanical aid, rather than looking out of the window at the front.

My point was not the specific problems but rather the way TT handled them and in doing so needlessly upset many of their existing customers. A bit of communication would have gone a long, long way.

That's probably a fair point. TomTom have never comunicated problems or their solutions very well at all.

 

[peebs24]

Go look on the TT forum if you want to see the continuing problems.
It is not a case of drivers not using their eyes. When the GPS suddenly flashes up a warning that the radar on the M6 is set at 30MPH because of the look-up table error, it is highly likely that some drivers might well try to slow down out of step with the rest of the traffic.
This whole thread was about TT losing market share. My point is that they deserve to do so because of the way they treat customer's problems. Lack of communications is just pure bad business.

 

[Andy_P]

Go look on the TT forum if you want to see the continuing problems.

Any chance of a link or two? I try to avoid browsing TomTom Discussions too much, it just annoys the hell out of me.

Again, I have to say that I have several UK TomToms and I have not seen this error for a very long time. Maybe they have not got up-to date software or database downloads?

When the GPS suddenly flashes up a warning that the radar on the M6 is set at 30MPH because of the look-up table error, it is highly likely that some drivers might well try to slow down out of step with the rest of the traffic.

Then I'm afraid they are stupid.

 

[peebs24]

Hi Andy,
Yup, but stupid people spoofed by a faulty GPS do cause accidents!
http://discussions.tomtom.com/t5/Bu...ra-Inaccurate-speed-warning/td-p/86707/page/8 shows the fix issued in Dec 2012 TWENTY MONTHS after it was reported! But the delay is only half the problem. In those 20 months TT were either silent as to when or if the fix was forthcoming, or totally denied that the problem existed! What does it cost to communicate? Answer - A contribution towards a € 2 million LOSS!!!

 

[mvl]

The speed cam mph/kph fix was resolved years ago in TT's core software, which is installed on PNDs (standalone TT devices).

The software installed on cars undergoes a much longer update cycle, some of it is politics (manufacturers don't want the hassle of supporting updates and tell TT not to send any to them), and some of it is the extensive manufacturer testing that in-dash systems undergo.

Regardless, probably due to French speedcam legislation in Renault's home country, Carminat finally got updated to the latest core software, which introduced "TT danger zones" and fixed the speedcam mph/kph issue, years later than the standalone Tomtom devices.

Some of the blame rests on Tomtom, but I'm sure lots of the fault is Renault's too, otherwise a fix should have come much much earlier.

 

[peebs24]

Hi mvl,
"The speed cam mph/kph fix was resolved years ago in TT's core software, which is installed on PNDs (standalone TT devices)."
All the more reason why:-
A .......... It should never have appeared in the newer in car devices.
B ........... The problem in the newer devices should not have taken 20 months to fix! This fact alone points to my argument that TT's management philosophy says that "We will get around to fixing the problems with existing customers when we have nothing better to do".

As far as most users are concerned if it looks like a TT, sounds like a TT and, judging by the comments re TT Customer Service, smells like a TT then it IS a TT and it is up to TT to either fix it or explain why it can't!
At the end of the day it is TT's reputation that is on the block of public criticism rather than Renault!!

Nothing excuses the total lack of communication which annoys and frustrates customers even more than the crappy product!!

 

[Andy_P]

Think we might have to agree to disagree on this one. As mvl said, if TT fix something and Renault choose to ignore it, I don't see how you can blame TomTom.

His post also helps to explain something I always found strange... if you go on-line to find something like the Carminat use manual, it is hosted on the Renault site, nothing to do with TomTom.

 

[canderson]

+1, and it isn't just TomTom devices that don't get updated. I can't tell you how poor the service has been by most automotive manufacturers when it comes to updating the firmware and maps on their vehicles. NEW vehicles are delivered with down-level maps (we can verify that new ones have been released) which dealers aren't willing or able to update, and many dealers don't even know how to update the firmware. Many have never seen a firmware update issued by the manufacturer.

The whole in-dash nav system business is pretty sad, actually, and by that, I include both those that are being installed at the factory, and 99% of the aftermarket business as well.

 

[peebs24]

" if TT fix something and Renault choose to ignore it, I don't see how you can blame TomTom".
Sorry Andy. The French Danger Zones were NOTHING TO DO WITH RENAULT. They too were waiting almost a year for TT to get around to issuing a fix. The very fact that it was TT CS who eventually issued the fix proves the point.
Had it been a case of Renault simply ignoring the TTfix then TT should have pointed us towards Renault. They didn't - they simply ignored us!!