Shares in TomTom NV (38705.AE) fell Tuesday after the navigation solutions provider reported a fourth-quarter net loss, announced further cost cuts and cautioned that under certain conditions it could breach its loan covenants.

"Based upon the group's plans for 2009, management expects to comply with the loan covenants. However, given the uncertainties in the wider macro-economic environment and their knock-on effect on consumer spending, scenarios can be envisaged where the loan covenants could be breached," said TomTom Chief Executive Harold Goddijn in a statement.

"As a result, the company continues to evaluate options aimed at remaining within its loan covenants under a variety of possible scenarios, which could include renegotiating the terms of the facility in isolation or in combination with other actions," he said.

In an interview with Dow Jones, Goddijn wouldn't elaborate on what "other actions" could mean, but some analysts speculate that should TomTom breach debt covenants it might consider launching a rights issue, taking out a third-party loan, selling a stake in TeleAtlas or issuing a convertible bond.

TomTom's net debt was reduced by EUR213 million from the third quarter and at the end of the fourth quarter stood at EUR1.12 billion.

The company's shares in early trading fell as much as 12.5% but recovered some ground and at 0959 GMT traded down EUR0.34, or 10.4%, at EUR2.93 while the benchmark AEX index traded down 1.8%.

TomTom competes in the portable navigation device market with Cayman Islands-based Garmin Ltd. (GRMN), which Monday reported a 49% fall in fourth-quarter net profit on falling sales. It also warned of the extremely volatile environment and declined to give a 2009 outlook.

Some of the industries TomTom supplies have been hit hard by the economic slowdown. Makers of electronic devices have suffered slowing sales as consumer demand waned. Automakers, for whom TomTom supplies navigation devices and which form a lynchpin of its global strategy, are also struggling amid a worldwide slump in demand.

The company posted a net loss of EUR989 million for the three months to Dec. 31, hit by an impairment charge and lower sales, compared to a net profit of EUR107 million in the same period a year earlier.

TomTom booked a EUR1.1 billion impairment charge for TeleAtlas, the digital-map maker it bought last year for EUR2.9 billion. The company in January warned that it wouldn't make its 2008 revenue target and said it would take an impairment charge for TeleAtlas.

Fourth-quarter sales fell 17% year-on-year to EUR528 million but were in line with analysts' forecasts. Sales fell 23% from the third-quarter when sales were EUR429 million. Although TomTom declined to give specific guidance for 2009, it said it expects TomTom to sell between 11 million and 12 million personal navigation devices, which should amount to between EUR1.4 billion and EUR1.6 billion in revenue.

Earnings before interest and tax, or Ebit, swung to a loss of EUR994 million from a profit of EUR144 million, missing analysts' expectations for Ebit of EUR65 million.

TomTom said it expects to make EUR60 million in cost savings, or 10% in operating expenses, in 2009.

 
   Company Web site: www.tomtom.com 
 
   -By Roberta B. Cowan; Dow Jones Newswires; +3120-571-5200; roberta.cowan@dowjones.com