TomTom admits police used data for speed trapsBy TOBY STERLING , 04.27.11, 04:56 PM EDT
AMSTERDAM -- TomTom NV, Europe's largest navigation device maker, went into damage control mode Wednesday after it emerged that Dutch police have been using data collected from drivers who use the company's products to set speed traps.
Earlier, TomTom had reported weak first quarter earnings in which it cut 2011 sales forecasts and said it was seeking to compensate for a decline in demand for personal navigation devices by growing service revenues, including selling traffic data to governments.
National newspaper Algemeen Dagblad reported that police had obtained the information from the government and used it to set targeted speed traps, prompting angry reactions from TomTom users.
In an e-mailed apology signed by Chief Executive Harold Goddijn Wednesday, said the company had sold the data to the government believing it would be used to improve safety or relieve traffic bottlenecks.
"We never foresaw this kind of use and many of our clients are not happy about it," he wrote.
He promised licensing agreements would "prevent this type of use in the future."
TomTom company reported first quarter net profit of euro11 million ($16 million), up from euro3 million in the same period a year earlier. It also reported worse-than-expected sales of euro265 million, a one percent decline.
The company cut its minimum full year sales target from euro1.52 billion to euro1.425 billion. It said it now expects the market for personal navigation devices to shrink by at least 15 percent in 2011 amid poor consumer demand and competition from substitutes such as tablet computers and smart phones. It said it had won market share from major direct rival, Garmin Ltd. ( GRMN - news - people ), in the first quarter.
TomTom shares closed 3.1 percent lower at euro6.112.
TomTom is seeking to diversify its offerings away from the ailing market for dashboard-mounted portable devices. Around half of its revenues now come from automakers who incorporate TomTom products into their cars and from companies - and governments - paying for map and traffic information.
TomTom is still recovering after it got into debt trouble with its acquisition of digital mapmaker Tele Atlas in 2008, and had to issue shares to stave off bankruptcy.
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