TomTom to trim 10% of workforce

TomTom, the beleaguered Dutch navigation technology company, is to slash its workforce by about 10 per cent as part of a strategy to cut costs and shift its business away from the shrinking market for personal navigation devices (PND).

TomTom has struggled over the past 18 months to cope with the shift among drivers to free navigation apps installed on smartphones. The job cuts are part of the company’s previously announced effort to achieve €50m in annual operational savings in 2012.

The company surprised with positive results in the third quarter due to a slower than expected drop in PND demand, but its long-term future lies in pre-installed navigation devices in cars and applications for fleet management for delivery companies.

TomTom said the job cuts would lead to a €14m restructuring charge in the fourth quarter of 2011.

The company also said it would reorganise its research and development activities into units tied to ten specific product areas. Harold Goddijn, chief executive, said the move “makes it easier to make innovation choices and will reduce our time to market.”

Analysts said the job losses were not unexpected and largely amounted to filling in details of the cost reduction strategy.

“The problem was that they were too big in their consumer activities in the old PNDs, so they had to streamline that division and focus on their growth areas,” Frederic van Daele of Kempen and Co said. “TomTom’s painful transition is going to last a while.”

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