TomTom has lowered its outlook for first-quarter and annual results. In the first quarter, the company estimates the personal navigtion device market grew by approximately 40 percent year-over-year in Europe and by more than 100 percent in North America. However, retailers reduced inventory levels more strongly than expected, especially in Europe, which restricted sell-in volumes in the quarter. The company also reduced prices in the channel earlier than planned ahead of the introduction of new products in the second quarter. TomTom expects to have shipped around 2.0 million PNDs during the first quarter, generating revenue of EUR 260-270 million, lower than in the first quarter of 2007, with an operating margin of a low single digit percentage. In the coming months, new products are expected to drive revenue growth both through higher volumes and higher ASPs. However, the weak first quarter means TomTom will not meet its full-year guidance. For the full year, TomTom now expects revenue of EUR 1.8-2.0 billion from sales of 14-15 million PNDs, with a gross margin and operating margin of close to 40 percent and 20 percent respectively.
