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HTC expecting drop in quarter revenues on seasonal factors

High Tech Computer Corp (HTC, 宏達電), the world's biggest maker of handsets running Microsoft Corp's operating system, yesterday said first quarter revenue would drop between 15 percent and 20 percent quarter-on-quarter because of seasonal factors.

The company's quarterly decline is better than a 20 percent - 25 percent drop estimated by Citigroup analyst Dale Gai (蓋欣山) before the release of the earnings because of insufficient supply of handset chips from Qualcomm Inc.

"We are not seeing significant cuts in orders from US customers, or weak demand for the first quarter," HTC chief financial officer Cheng Hui-ming (鄭慧明) told an investors conference yesterday.

Seasonal factors will nevertheless have a significant impact on revenues, he said.

On an annual basis, first-quarter revenue should expand about 35 percent from NT$39.02 billion in the previous quarter, fueled by strong demand for the firm's brand business, Cheng said.

The US market accounted for the biggest source of HTC's revenues last quarter at 42 percent.

HTC said that it had secured stable chip supply from Qualcomm and did not expect Qualcomm's patent disputes with Nokia Oyj to affect it.

HTC's brand business should expand at a 70 percent annual pace this quarter, he said, while gross margin was expected to hold steady at 34 percent.

HTC aims to increase revenues for this year by 20 percent to 30 percent, helped by new products such as cellphones with TD-SCDMA technology for the Chinese market, WiMAX technology and phones with the Android platform for Google Inc.

Last year, the company's revenue increased 11.73 percent to NT$118.58 billion.

Earlier this month, HTC said fourth-quarter net income expanded 35 percent to NT$10.02 billion from NT$7.41 billion a year ago. HTC's brand business accounted for around 60 percent of revenues last quarter.

Handset shipments rose nearly 4 percent to 9.98 million units last year compared with 2006.

Citigroup gave a "buy" rating for HTC with a 12-month target price of NT$850, implying a 49 percent upside on the stock's closing price of NT$570 yesterday.
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