Fri, Aug 01, 2008 - Page 12 News List

HTC forecasts 10% increase in revenue over second quarter

By Elizabeth Tchii  /  STAFF REPORTER

High Tech Computer Corp (HTC, 宏達電) yesterday reaffirmed its expectations for the year and said results so far were in line with expectations. The company predicted a 30 percent increase in revenue year-on-year, or 10 percent quarter-on-quarter, in the third quarter.

HTC, the world’s biggest maker of handsets running Microsoft Corp’s operating system said gross margin was expected to be 34 percent to 35 percent for the third quarter — a slight drop because of increased original design manufacturing.

“HTC has no surprises for this quarter or next. We delivered everything that was promised in the 2008 guidance,” the company’s chief financial officer and spokesperson Cheng Hui-ming (鄭慧明) told investors in a teleconference yesterday.

Last month, HTC launched its Touch Diamond smartphone in a bid to compete with Apple Inc’s latest iPhone model.

The Diamond handset is sold in 30 countries by 50 telecommunications operators and the company plans to offer four to five new versions of the Diamond series in the second half of the year, including one with wideband code division multiple access (WCDMA) capabilities, he said.

Cheng did not provide exact figures for sales of the smartphone, but has said that analysts’ projections of between 2 million and 3 million units this year is not impossible.

Although the company is upbeat about its outlook, its shares dropped 1.02 percent to NT$486 on the Taiwan Stock Exchange yesterday before the company released its second-quarter figures. The stock has declined 18.87 percent so far this year, stock exchange tallies showed.

During the conference, Cheng sought to dispel concerns by saying repeatedly that HTC was meeting its revenue targets without a problem.

He blamed the company’s recent lackluster stock performance on misinformed rumors that the company had reduced its orders of supplies because of dropping sales.

HTC’s revenue for the second quarter totaled NT$34.62 billion (US$1.13 billion), which was an increase of 5.9 percent from the previous quarter and 28.9 percent from a year earlier. Earnings per share declined slightly to NT$13.62 in the second quarter from NT$14.51 in the first quarter.

Taking into account inventory provisions and expenditures from working with operators to sell handsets, HTC’s gross margin dropped by 1.1 percentage points to 35 percent in the second quarter from the first quarter, Cheng said.

During the conference yesterday, Lehman Brothers analyst Alex Yang questioned whether the company’s 34 percent to 35 percent gross margin forecast for the third quarter included spending on employee bonuses.

Cheng said the estimate did not take this into account, however, “looking at past figures, employee bonuses account for around 0.5 percent of gross margin.”

Cheng emphasized HTC’s commitment to developing its brand recognition through innovative, value-added products. To achieve this, the company has recruited many software experts in Taiwan and abroad, he said.

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