Price cuts on GPS devices has hit Dutch manufacturer TomTom hard.

The company has cut its 2008 revenue outlook this week and also warned that its first quarter sales and profits will be impacted.

It said that its quarterly sales for the first financial accounting quarter of 2008 would be down compared to last year's sales for the first time since it went public in 2005.

The Amsterdam-based firm is predicting first quarter sales of 260 million to 270 million euros which is well below an average forecast of 347 million euros from analysts polled by Reuters Estimates.

And the weak first quarter will have an obvious impact on the company's full-year 2008 revenue, which is now being estimated at between 1.8 billion and 2.0 billion euros, which is considerably lower than the projection of 2-2.2 billion made in February.

But TomTom has tried to quell concerns by pointing to the fact that it cut the prices of some of its devices ahead of new launches.

It did, however, also point to the fact that retailers are not keeping as much stock instore, which reflects wider fears of an economic slowdown.

"That's not TomTom specific, it's not even PND specific, it's a generic desire of retailers to shorten their balance sheets", TomTom CEO Harold Goddijn told an analyst conference call. "I don't think it's a slowing down of the market overall."

Goddijn added his confidence that sales will pick up in the second quarter.

"Inventory levels have been reduced, but PNDs are the fastest-growing consumer product category in the world, and retailers cannot afford not to stock it. At some point we will get the orders", he said.

He continued that with new products hitting the market and the summer driving season approaching: "The outlook for the second quarter in principle is good".