TomTom ... Is AAPL going Dutch?
Over the last week AAPL came out with some interesting news in their war with google. This news was with regards to navigation tools. While not everyone may know what a TomTom is, but here in the Netherlands, its become a part of dutch vocabulary when describing personal navigation (regardless if its from TomTom or not!)
TomTom will be providing navigation services for AAPL products (the details still need to be released).
For this struggleing company however this news comes as a breath of fresh air and a promise of new life! Since 2008 thier shares have fallen from 60 Euro a sharee to 2.48 in 2011. Thier current price of 3.69, is but an indicationof how this company has been struggling in this oversaturated segment, where it once was a dominant force. Now with the help of AAPL, consumers and investors might be ready to become top fans of the dutch based TomTom.
Revenue Analysis (April 25th) http://i.imgur.com/bHnhs.png
While the company has been suffering since the beginning of the financial crisis in 2008, we must realize that this has been due to their product saturation. Thier major competitor is Garmin which holds a larger market share in the USA that europe but with AAPL you can imagine that that is about to change! Difficulties for TomTom had been that many car manufacturers have signed product agreements with other map service providers that were cheaper than TomTom. The one thing that made TomTom stand out from their competitors was the product quality that they offered, and in recent years thier offering of subscriptions to customers ( such as traffic jam notification, traffic cameras, offering ways to navigate past traffic conjestion). Also recent products for the buisness segment promising massive fuel reduction costs for companies has been helping buisness. So the one thing that we can say for sure is that they have not stopped with their product innovation.
This week Tom Tom shares increased over 15% on news that they will be joining up with Apple. While I have not often been a fan of Apple products, I must confess that their iPhones and iPads is what makes Apple so special and the do offer a good but pricy product. Aaple is all about design, inovation and customer service. If you ever used a TomTom before you can see that TomTom does not fall far from the apple tree (pun intended).
Thats where I think that Apple and TomTom will make a perfect match.
While the details of the deal have not yet been released, just the idea of Apple offering TomTom services on iPhones and iPads, will result in a massive income boost for the company. Not only due to the increased accessability of their product, the ability to provide subscriptions easier world wide.
While this change might impact TomToms overall selling of Personal Navigation Products and increased dependence on Aaple, this new deal will in anycasse offer a better return, since they will be selling more digital content rather than physical products.
I believe that this is the fresh breath of air TomTom needed. Now all we need to do is wait for the results of the deal between the two companies! In any case it will probably be more favourable for TomTom than Apple. European stocks are cheap and this one deal probably has a good chance of being a long term winner!
*note Tom Tom NV is sold on the Amsterdam stock exchange in Euros under the ticker TOM2.AS.
57% internal ownership
43% free float
Shares outstanding: 221895012
Avg Volume: 1500000 - 2500000 shares a day
@ Apple announcement this number was 1000000
Like many european companies their growth is world wide based
Top producer of navigation systems