Europe’s largest maker of portable navigation devices reported a surprise second-quarter loss after writing down the value of assets to reflect a declining market for those devices.
The company reported a net loss of 489 million euros compared with a profit of 34 million euros a year earlier. The average forecast of nine analysts surveyed by Bloomberg was net income of 10.7 million euros.
The company took an impairment charge of 512 million euros in the quarter “reflecting the reduced outlook” for the personal navigation device market. Of the charge, 473 million euros related to goodwill. Sales decreased 13 percent to 314 million euros.
Earlier on June 27, TomTom had reduced its full-year profit and sales forecasts, saying U.S. demand for its devices had declined faster than anticipated and that consumers were opting for cheaper navigation systems.
After the statement, TomTom’s stock plunged 27 percent the day after. Its shares have declined 54 percent this year, reducing the market value of the Amsterdam-based company value to 812 million euros. Its U.S. rival Garmin has gained 5.6 percent this year.
Maaike Noordhuis of Bloomberg reports that TomTom, which competes with Garmin and Google, aims to get more revenue from maps, services and built-in systems in cars amid a slowdown in sales of portable navigation devices.