HTC's record Q3 income aided by 3G handset sales

High Tech Computer Corp (HTC, 宏達電), the world's largest maker of cellphones based on Microsoft Corp's Windows operating system, said profit more than doubled for the seventh straight quarter as advanced handset sales rose.

Third-quarter net income more than doubled to a record NT$6.71 billion (US$202 million) from NT$2.64 billion a year earlier, the Taoyuan-based company said in a statement yesterday.

Company president Peter Chou (周永明) boosted profit by raising sales of so-called third-generation, or 3G, cellphones which can access the Internet at faster speeds. HTC also added customers including Japanese cellular operator Softbank Corp in the quarter and began selling handsets under its own brand name.

"The company has been moving its product mix from 2G to 3G," raising profitability, said Tony Tseng (曾省吾), an analyst at Merrill Lynch & Co in Taipei, before the earnings report was released.

Tseng has a "buy'' rating on HTC.

Third-quarter sales rose 59 percent to NT$26.4 billion from NT$16.6 billion a year earlier, based on monthly figures reported earlier.

Shares of HTC rose 1.2 percent to close at NT$843 before the earnings were reported. The stock has risen 64 percent this year, beating a 3.5 percent increase in the 289-member Taiwan Electronics subindex.

Gross margin, or the percentage of sales left after subtracting production costs, widened to 33.9 percent in the third quarter, compared with 32.6 percent in the second quarter and 23.8 percent a year earlier.

Third-quarter profit margin rose to 25.4 percent from 22.1 percent in the prior quarter and 16 percent a year earlier.

HTC said last month that it would sell 3G phones to subscribers of Softbank, Japan's third-biggest cellphone operator.

Chunghwa Telecom Co (中華電信) said it sold about 15,000 units of the CHT9000 handset from July 3, when it introduced the model, to Oct. 17. The cellphones are made by HTC and co-branded by Chunghwa and HTC subsidiary Dopod International Corp (多普達).

HTC boosted its share of the market comprising Europe, the Middle East and Africa to 4.1 percent in the third quarter from 1.2 percent a year earlier, according to Reading, England-based research company Canalys.com. Third-quarter shipments in that market more than tripled to 298,730, Canalys said in a report dated Oct. 24.

The company forecast that total shipments, including personal digital assistants and cellphones, would rise at least 43 percent to more than 10 million units this year from 7 million last year, Chou said on Aug. 28.

HTC on June 2 said it would pay as much as US$150 million to buy a controlling stake in Dopod International to expand sales of Windows-based cellphones. The acquisition is expected to be completed this year.