HTC expects steady sales growth but slightly lower margin in third quarter

High Tech Computer Corp (HTC, 宏達電), the world's largest maker of handsets using Microsoft Corp's Windows operating system, yesterday said it expects profit margins in the current quarter to shrink given a higher base in the second quarter because of a one-time gain in royalty fees.

However, third-quarter sales growth is likely to be a high "single digit," thanks to the launch of its brand business and continuing coooperation with local and foreign telecom operators, company spokesman Cheng Hui-ming (鄭慧明) said in a statement yesterday.

"Sales momentum will start to pick up on a monthly basis beginning next month," he said.

A new Code Division Multiple Access (CDMA) based phone, which will be shipped to the US in the third quarter, will add to the sales momentum, the statement said.

Jack Tong (董俊良), vice president of HTC Asia, said earlier this month that the company would see steady growth in Asia-Pacific sales in the second half after the rollout of its first own-brand phone HTC Touch and the opening of service centers in the region.

HTC reported gross margins of 37.1 percent in the second quarter and 34.9 percent in the first quarter.

Its net income was NT$5.98 billion (US$181 million) in the second quarter, up 4.2 percent from NT$5.74 billion during the same period last year.

Earnings per share in the second quarter dropped to NT$10.42, from NT$13.14 in the same period last year.

Shares of HTC closed down 3.1 percent to NT$603 on the Taiwan Stock Exchange yesterday.