New phone model to spur sales: HTC

High Tech Computer Corp (HTC, 宏達電), the world’s biggest maker of phones running Microsoft Corp’s system, expects revenues this year to grow more than 20 percent year-on-year, helped by sales of its new “Touch” phone next month, a company executive said yesterday.

Sales the current quarter could reach NT$34 billion (US$1.12 billion), with 70 percent coming from high-priced third-generation (3G) handsets, aided by a new product launch on May 6 in London, HTC financial executive Cheng Hui-ming (鄭慧明) told an investor’s conference.

That would represent a 27 percent increase from NT$26.86 billion during the same period last year, or a 7 percent quarter-on-quarter increase.

Cheng said the company was on track to hit its full-year revenue growth target of between 20 percent and 25 percent.

“This is the most important product for HTC this year,” Cheng said. “With this phone, we’re confident of landing orders from most major operators.”

But Cheng also warned of possible delays in shipments, as HTC has yet to obtain certification for the new handset model.

“Postponing shipments of the new Diamond model may put the share price under pressure during Monday’s trading. Investors are highly sensitive to delays in product launches,” said Lu Chia-lin (呂家霖), an analyst at Macquarie.

Macquarie an “outperform” rating on HTC, with a target price ofNT$1,020, which implies about 30 percent upside.

“HTC’s outlook for the second quarter, however, looks quite good,” Lu said, adding that its net income may be sustained at first quarter levels.

Earlier month, HTC said that net profits expanded at a faster-than-expected 25 percent year-on-year to NT$6.94 billion after deducting spending for employee bonuses, as it sold more high-margin 3G phones.

Gross this quarter may drop by half or a full percentage point to 35 percent or 35.5 percent from last quarter’s 36.1 percent because of a one-time inventory write-off — not demand concerns, Cheng said.

“[Demand in] Europe looks similar to what we saw in November and December,” Cheng said.

HTC the bulk — or 40 percent — of its sales from Europe.

Average prices are expected to remain firm in the current quarter, Cheng said, despite claims by rivals, such as Nokia Oyj, saying European demand was shifting to lower-priced models in the face of the economic slowdown.

HTC plans to raise its dividend payout ratio to about 70 percent based on last year’s earnings. The company paid out 60 percent last year.

The board yesterday approved a proposal to distribute NT$34 per share in cash dividends and 30 percent in stock dividends based on the company’s earnings last year of NT$28.93 billion, or NT$50.44 per share.

The proposal will be voted on at the company’s annual shareholder’s meeting on June 30.