Shares in Dutch navigation equipment maker TomTom NV (TOM2.AE) Wednesday dropped as much as 13.5% after the company posted a 47% drop in third quarter net profit due to a steeper-than-expected price decline for its key navigation products.

Net profit fell to EUR31 million in the quarter ending September 30, from EUR58 million a year earlier as average selling prices (ASP) for its navigation devices dropped by 27% compared to last year and 12% compared to the second quarter. Analysts had expected a EUR36.4 million net profit.

"The price decline was driven by price decreases across a number of products, partly in anticipation of promotional activities in the fourth quarter," TomTom said in a statement, adding it continues to expect that the rate of ASP decline for the full year will be slower than in 2008.

At 0915 GMT, TomTom's shares were down 8.6% at EUR9.36, by far the biggest fall on the AEX index. The stock has risen about 118% so far this year, outperforming a 25% rise in the AEX, due to previous positive comments from the company and as it earlier this year relieved worries about its debt position by completing a rights issue.

"TomTom's third quarter results were better at all important levels versus our and consensus expectations, except for ASP, which was substantially lower", SNS Securities analyst Martijn de Drijver said. He rates TomTom at hold.

Sales fell 15% to EUR365 million in the third quarter, compared with EUR429 million a year ago, missing the EUR369 million forecast by analysts.

The company said end user demand continued to develop in line with expectations. For the full year 2009 TomTom expects the European and North American portable navigation device markets to be approximately 15 million and 17 million units respectively.

In the third quarter TomTom sold 2.6 million personal navigation devices, 2% more than the previous year.

However, Chief Financial Officer Marina Wyatt refrained from reiterating the company's previous guidance that it expects to sell between 11 million and 12 million units in 2009 and that revenue would be between EUR1.4 billion and EUR1.6 billion.

TomTom failed to gain market share in the US in the third quarter. Chief Executive Goddijn had previously said he was confident the company would gain market share in the region in the second half of 2009 as the price difference between TomTom's products and those of rival Garmin Ltd (GRMN) narrows.

TomTom, along with Cayman Islands-based Garmin , has been cutting cost to offset the sharp drop in consumer spending on electronic goods caused by the economic slump, which has hit sales and margins. The increasing prevalence of location-based services available on mobile phones has also hurt the companies.

TomTom said it's ahead of schedule to deliver EUR90 million in cost savings compared to 2008. "We should exceed our cost savings target," chief financial officer MArina Wyatt told a conference call.

-By Robin van Daalen; Dow Jones Newswires; +31-20-5715 201; robin.vandaalen@dowjones.com