AMSTERDAM, Netherlands (AP) - Shares in navigation device maker TomTom NV fell sharply yesterday after the company cut financial estimates for 2008, blaming weak pricing power and retailers' stocking fewer of its products.

In the first quarter "retailers reduced their inventory levels more strongly than expected, especially in Europe," where TomTom has a 50 percent share of the market for devices used in cars, the company said in a statement.

TomTom said its first quarter revenue will be around 260-270 million euros ($408-425 million), less than the 296 million euros it reported in the first quarter of last year.

It said operating margins will be in the "low single digits," from double digits in recent quarters. It is due to report earnings on April 23.

The Amsterdam-based company had earlier forecast sales growth of at least 20 percent in 2008 but it said now it will not meet that target.

TomTom said it had "reduced prices...earlier than planned ahead of the introduction of new products in the second quarter."

Its shares tumbled 13.8 percent to 22.78 euros ($35.78) in Amsterdam.

Chief executive Harold Goddijn attributed the falling sales entirely to retailers wanting to work off excess inventory, and denied consumer demand was slackening for personal navigation devices.

"Underlying growth is still there, and it's strong," he said.

But Petercam analyst Eric de Graaf wrote, "This is a full scale profit warning." He said in a note it appeared the company was having trouble maintaining average selling prices per device, sales and margins.

That "puts a major dent in the investment case," he said.

TomTom competes against Cayman Islands-based Garmin Ltd., which is larger in the US and overall, while Taiwan's MiTac International is growing quickly. All three face competition from cell phones that can offer navigation software.

TomTom is currently waiting approval from European competition authorities for its planned acquisition of digital mapmaker Tele Atlas NV for 2.9 billion euros ($4.3 billion).

TomTom sparked a round of consolidation in the highly-concentrated digital mapmaking industry when it began bidding for Tele Atlas last summer. Mobile phone maker Nokia Corp. later bid $8.1 billion for Tele Atlas's only major rival, Chicago-based digital mapmaker Navteq Corp., in a deal that is also under investigation by anti-trust regulators.

Experts believe that navigation will be improved in the future as mobile device users automatically relay information on conditions in the field to instantly update digital maps for other users - a system that will require close integration of maps and devices.

The companies that own the mapmakers may have a competitive advantage.

After Nokia appeared to have the Navteq deal locked up, Garmin bid on Tele Atlas, forcing TomTom to bid higher or risk being left without a partner.

In November, after TomTom had increased its initial offer for Tele Atlas by almost 50 percent, Garmin signed a long-term deal with Navteq, guaranteeing access to its maps for the coming decade, and dropped out of the bidding.

TomTom's share price has halved since November, and after yesterday its market capitalisation is slightly less than the price it is paying for Tele Atlas.

"With profitability down so much, servicing the debt for the planned Tele Atlas acquisition could even become problematic," analyst Mr. De Graaf said.

TomTom's chief financial officer Marina Wyatt said she was "comfortable" that TomTom will be able to meet creditor's demands in financing the Tele Atlas buy.