TeleNav (TNAV) Shares Plunge On Downgrades, Sprint (S) Uncertainty

TeleNav Inc. (TNAV) shares sank 45 percent in Friday trading, the most intraday since it went public in May, after the mobile navigation services company disclosed that ongoing contract negotiations with its largest customer, Sprint Nextel Corp (S), could lead to a reduction in revenue.

“TeleNav cannot predict whether or when it will reach agreement with Sprint on these matters or what the ultimate financial impact would be,” the company said in a statement.

TeleNav also said that “any extended agreement would result in declines in ARPU [average revenue per user] and significant reductions in total revenue from Sprint for bundled basic navigation services compared to the most recent quarter.”

Sunnyvale, California-based Telenav got 61% of its revenue from Sprint in fiscal 2009.

The current contract for TeleNav to provide the Sprint Navigation application runs through December 31, 2011, but TeleNav is set to lose its exclusivity on the deal at the end of this year.

JPMorgan (JPM) cut TeleNav to “neutral” from “overweight”. The stock was downgraded to “neutral” from “outperform” by Baird and to “hold” from “buy” by Deutsche Bank (DB).

TNAV shares are lower on the session by 38%, currently trading at $5.54. The stock hit a low of $4.95 earlier in the day.

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