2nd UPDATE: TomTom, Sanyo Team Up On Navigation Devices
September 16 2009 - 11:35AM
Dow Jones News
Japanese electronics supplier Sanyo Electric Co. Ltd. (6764.TO)
and Dutch navigation device maker TomTom NV (TOM2.AE) Wednesday
said they will team up to produce multimedia navigation
systems.
"It's our ambition to sign a deal with a car maker towards the
end of next year together with Sanyo," TomTom spokesman Taco
Titulaer told Dow Jones Newswires. He said negotiations are ongoing
with Japanese car makers, without elaborating.
Sanyo, which is unprofitable, said that through collaboration
with TomTom it can tap into potentially lucrative growth in North
American and European markets as the auto industry shows signs of
recovery while other Sanyo businesses suffer from weak consumer
demand.
The firms aim to produce multimedia devices that combine
navigation-based functions with other features, such as a DVD
player, TomTom's Titulaer said.
Sanyo also said that while navigation systems built into
vehicles are commonplace in its home market, portable navigation
devices such as those produced by TomTom, often fitted separately
to cars after they are sold, are more popular in Europe and North
America.
Teaming up with Sanyo in the European and U.S. in-car navigation
market is good news for TomTom, SNS Securities said, noting that
the tie-up could allow TomTom to develop multimedia navigation
systems for the lucrative part of the in-car segment, where Pioneer
Corp. (6773.TO), Delphi Corp. (DPH), Continental AG (CON.XE) and
Blaupunkt are market leaders.
SNS Securities also said Sanyo's connections with the U.S. car
industry would give TomTom a better chance to break into the that
market.
SNS Securities rates TomTom at accumulate with a target price of
EUR8.
By 1430 GMT, TomTom shares rose 1.6% to EUR13.10 in Amsterdam,
slightly outperforming the broader market.
Sanyo shares earlier closed up 2.5% at Y254 in Tokyo, in line
with gains by electronics peers, having traded at Y252 just before
the news was disclosed, with little short-term benefit from the
tie-up expected on Sanyo's bottom line.
The Nikkei index ended the day 0.5% higher.
The collaboration with TomTom comes as Sanyo, in the process of
being taken over by local peer Panasonic Corp. (6752.TO) in a $9
billion deal, chases growth markets to help meet its target of
breaking even in the fiscal year through March 2010. It recorded a
net loss of Y92.3 billion in its latest fiscal year ended
March.
Web sites: www.sanyo.com ; www.investors.tomtom.com
-By Archibald Preuschat, Dow Jones Newswires; +49 211 13872 18;
archibald.preuschat@dowjones.com