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Yesterday Apple (Nasdaq: AAPL) unveiled plans for a new mobile mapping software. Today, portable GPS maker TomTom (Tom2.AS) agreed to provide the maps for Apple’s new service – a move that has sent TomTom shares skyrocketing in early trading.
TomTom shares were up nearly 14% as of 10:30 a.m. eastern time – which shows just how powerful going to bed with Apple can be. As a company, TomTom is well-known to anyone who has a GPS navigation system in their car. Millions of people around the world use TomToms to map their driving routes.
But the stock itself isn’t very well-known. Most investors would probably need a TomTom to locate the exchange where the company’s stock is sold. Because the company is based in the Netherlands, TomTom shares trade on the Amsterdam Stock Exchange.
A quick overview of TomTom shares on Yahoo! Finance reveals very little about the stock or the company. No “key statistics,” income statements or cash flow is available. Even the market cap and P/E ratios aren’t listed.
But the stock is making a huge push today, vaulting to $3.75 a share after closing at $3.27 a share on Monday.
TomTom’s sales have been declining as more and more drivers are using direction-finding software on their smartphones and electronic tablets when navigating a route.
But the Apple deal — the terms of which have yet to be made public — solves that problem. Apple intends to replace Google (Nasdaq: GOOG) Maps with its new mapping software as the default navigation system on all its iPhones and iPads. Apple’s new service will have several advanced features, including a 3-D map-viewing mode. And TomTom will be supplying all the maps.
Just being associated with the biggest company in the world is a coup for TomTom. From a practical standpoint, it’s possible that TomTom’s sudden availability on Apple iPhones and iPads will further weaken sales of its own personal navigation systems.
However, the mobile mapping business is quite lucrative. According to Fox Business, analysts estimate that roughly $625 million is spent on mobile ads tied to maps each year.
Apple is clearly very serious about the success of its new mobile mapping system – enough to drop Google Maps, the gold standard in the mobile mapping industry. Its success should benefit TomTom.
And being tied to Apple’s success is rarely a bad thing.