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Thursday, December 13, 2012

More Analysts Chime in on Suggesting Apple Should Buy TomTom ... or Not

Back in September, after Apple released iOS 6 with Apple Maps, I suggested in an artcle that the fiasco was indicative of a lack of understanding of what it takes to do an Internet mapping application well and that Apple should acquire TomTom, it's mapping data provider. Since that time, Tim Cook, Apple's CEO, fired Richard Williamson who oversaw the mapping team.

Now comes word that another analyst thinks Apple should make the move to acquire TomTom as well. Maybe it's a reaction to today's release of Google Maps for iOS 6 or maybe it's just common sense. Evan Niu of The Motley Fook writing in AOL's Daily Finance, quotes Hans Slob of Rabobank who says there is a 30% chance of Apple making a bid for TomTom. Slob is quoted as telling investors that "TomTom needs the cash and Apple needs the mapping data to supplement their own Maps iOS app." This is the same argument I made as well.

But Niu doesn't think the fit is right for Apple. He argues that Apple typically buys companies with technology that can be integrated with its products and that TomTom is but one of many data suppliers. He goes on to say that

Growing revenue has never been the goal of an Apple acquisition. In fact, Apple usually scales down the business operations of acquisitions as it focuses on the parts it wants, which is another reason why it goes for smaller companies, since their revenues are rounding errors within Apple's consolidated results and no one would notice their absence. TomTom's full-year guidance is targeting $1.4 billion in revenue for 2012. TomTom's business has four operating divisions, including partnerships with automakers as well as the stand-alone GPS units it still sells. Hardware sales were 62% of sales last quarter. These aren't businesses that Apple wants to buy and then shutter.

So, in Niu's opinion, Apple won't make TomTom its next acquisition.

by Joe Francica on 12/13 at 08:08 AM | Comments | Bookmark and Share

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