At the crossroads of telematics, the TomTom CEO is considering the next step

SAN FRANCISCO (Reuters) – TomTom Digital Mapping Company (TOM2.AS) will consider going it alone or seeking partnerships if it sells a fleet management company that is more than half of its current value, said its managing director at Reuters.

The Dutch company TomTom, with a market capitalization of 1.75 billion euros (2 billion USD), with no debt and with 179 million euros of cash, hired Barclays in September to conduct a study of its division "Telematics" in the perspective of a possible sale.

Finding a fair price for the division, which helps companies save money by using software to monitor and improve the performance of their fleets of cars and trucks, might not be simple, said the managing director. , Harold Goddijn.

Telematics, which achieved a turnover of 43 million euros in the third quarter, up 6% from a year ago, is "a bit of a mystery" for analysts, added Goddijn, one of the company's founders.

The division grew slowly but quickly in the shadow of a better-known consumer company for the production of satnav peripherals – a company in decline – and analysts for providing digital maps embedded in Apple's Apple Maps application. iPhone.

Telematics is expected to post a base profit of 60 to 70 million euros this year, so the valuations of the business are between 700 million and 1.4 billion euros. Analysts on the sellers' side do not agree on the amount of profits that the company, which seems likely to expand its steady but not spectacular growth, will pick up.

A good deal for telematics would help support the price of TomTom's stock after the recent volatility.

"If you look at the sum of the parts and valuation and market capitalization, there is something wrong and needs to be better explained," said Goddijn at an interview this week in San Francisco.

TomTom, created in 1991, helped advance dashboard-based navigation devices, but now competes with HERE, a German company, and with Google for the sale of embedded digital cards in software and control panels of the car.

Next turn?

Goddijn refused to say what TomTom would do with the proceeds from the telematics sales, despite the drastic changes that an assignment would have on the company's profile.

TomTom shares have lost 7% since the beginning of the year after Google Maps entered its key market, providing navigation and traffic software to automakers. Until now, Google has poached several TomTom customers, including Renault and Volvo.

It's part of a larger set of automakers and tech companies that are gearing up for a long and costly transition to autonomous vehicles.

Just this week, it appeared that Ford and Volkswagen, as well as Volvo and Baidu (BIDU.O) are negotiating partnerships to develop and commercialize autonomous driving technology, in which cards will play an important role.

"We do not know which economic model we will use to provide the next generation of map content to the vehicle: is it better to be independent? Is it better to team up? It will take time to understand that, "said Goddijn.

He said he is confident that TomTom's automotive software sales will continue to grow over the next three years, without excluding a major takeover or partnership with a larger automaker or technology company. .

Goddijn and the other three founders of TomTom hold a 44% stake in the Dutch company. Some investors are concerned that this company may enter into an operation that involves effective control.

"The founders, the emotional attachments and everything you care about always have a great importance. I want to make things clear, "said Goddijn.

"We will do everything right for the company, employees, stakeholders and customers, just like any other company, and we will review its evolution. We will see."

($ 1 = 0.8780 euros)