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Last updated: July 1, 2013 8:43 pm
Navigation company TomTom has denied reports that it is planning to sell its consumer personal navigation device (PND) business, after an interview with the chief executive over the weekend boosted market hopes that a divestment was under consideration.
In an interview on Saturday with the newspaper NRC Handelsblad, Harold Goddijn, the Dutch company’s chief executive, had declined to rule out the possibility that the consumer division would be hived off.
But the company said on Monday evening that the interview was being “taken out of context”.
“We are not planning to sell the consumer division,” TomTom’s Yann Lafargue said.
Shares in TomTom closed up 7 per cent Monday as buyers hoped the company might be ready to consider splitting off the consumer business from the company’s business services, automotive and mapping divisions.
The personal devices division is profitable and accounts for most of TomTom’s revenues, but the business is in long-term decline as customers shift to free navigation apps on smartphones or built-in dashboard devices.
Analysts believe TomTom shares would be easier for buyers to assess if the company did not include the personal navigation devices division, which is hard to value because it is shrinking at 10 to 15 per cent per year.
In earlier interviews, Mr Goddijn had been unwilling to discuss divesting what the company has traditionally seen as core businesses, insisting the company could turn its trajectory around in 2013.
“Mr Goddijn is taking a more critical look towards his own company, and there are no taboos any more,” said Hans Slob, an analyst at Rabobank.
Analysts have also pressed TomTom on whether it would sell its maps division for an appropriate price, a key intellectual property asset that forms the basis of the company’s licensing deal for the Maps app in Apple’s iOS.
The maps division was acquired when TomTom bought TeleAtlas for $2.8bn in 2007. The assets would now be worth considerably less.
According to Mr Goddijn, it has become increasingly difficult for TomTom to compete against the massive investments in mapping being made by Google and Nokia. That difficulty was underlined by Google’s $1bn acquisition of the social mapping company Waze.
For TomTom, with revenues of more than €1bn in 2012 and a 2013 guidance of €900-€950m, such investments are out of reach.
TomTom shares closed up 7 per cent to €4.05 in Monday trading on the Amsterdam exchange, against a 1.2 per cent rise in the AEX index.
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