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HTC sees flat first-half revenue

Feb 04 2013 10:24 Reuters
HTC Desire X


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Taipei - Taiwanese smartphone maker HTC expects revenue to be flat to 17% lower in the first quarter compared with the previous three months, worse than forecast, while margins are also seen holding steady or shrinking.

The former contract manufacturer's fortunes have been declining sharply since the second half of 2011, as the growing dominance of Apple's iPhone and Samsung's Galaxy range quickly deflated the success of its own brand's rapid rise.

HTC said on Monday that it expects first-quarter revenue of T$50bn to T$60bn. That compares with T$60bn in the fourth quarter and T$65.75bn a year ago.

Analysts have forecast HTC would earn revenue of T$62.77bn for the quarter, according to the average projection of 18 analysts polled by Thomson Reuters I/B/E/S.

HTC also said it expects a first-quarter gross margin of about 21% to 23%, flat to lower from 23% in the prior quarter, and an operating margin of 0.5% to 1.0%, also flat to lower from 1%.        

The weaker-than-expected first-quarter revenue outlook follows a 91% year-on-year slide in the Taiwanese company's net profit in the fourth quarter that fell short of analyst forecasts.

Analysts doubt that 2013 will be a turnaround year for HTC as the strength of its brand lags far behind Apple and Samsung.

But some have said that the next version of its flagship smartphone, code-named "M7" and which they expect to be launched in the middle of this month in New York and London, could give the company a first-mover advantage of a few months on features such as higher-resolution cameras.

Samsung, the world's top smartphone maker, said last month that it expected the global smartphone market to shrink in the first quarter from the seasonally strong fourth quarter, while the overall handset market would see growth at a mid single-digit percentage rate this year from 2012, with the smartphone segment set to slow.

Strong smartphone sales powered an 89% increase in operating profit at the Korean company in the October-December quarter to a record $8.3bn.

Cupertino, California-based Apple, which faces intense competition from Samsung, sparked a slide in its share price late last month when it forecast lower revenue of $41bn to $43bn in its current fiscal quarter, down from $54.5bn in the previous quarter and below the average Wall Street forecast of more than $45bn.

On Monday, shares of HTC fell 1.6%, versus a 0.9% rise in broader market. HTC's shares have fallen more than 40% since the start of last year, compared with a 12% rise in the Taiwan stock benchmark.  

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