Tue, Apr 07, 2009 - Page 12 News List

HTC reports large drop in earnings during first quarter

By Elizabeth Tchii  /  STAFF REPORTER

Smartphone maker HTC Corp (宏達電) yesterday reported a 29.59 percent decline in net earnings in the first quarter to NT$4.89 billion (US$148.26 million), compared with NT$6.95 billion for the corresponding quarter last year, the company said in a statement yesterday.

Earnings per share (EPS) declined to NT$6.56 last quarter from NT$12.12 a year earlier.

Regardless of disappointing financial results, the nation’s largest vendor of mobile phones running on Windows platform reiterated its full year double-digit sales growth guidance yesterday.

“HTC fell short of its previous first-quarter forecast primarily due to our delay in new product shipments until April,” the statement said.

The smart device maker posted its first quarter sales of NT$31.59 billion, a year-on-year decline of 3.40 percent.

Global financial institution Bank of America-Merrill Lynch estimated that by the fourth quarter of last year, HTC had secured a 5.5 percent global smart phone market share, or year-on-year growth of 144 percent. No other feature-rich smart mobile maker posted such consistent growth potential except for Canada’s Research In Motion (RIM), its data showed.

Although Bank of America-Merrill Lynch analysts had previously expressed concerns about HTC’s margin erosion and decline in average selling prices because of fierce competition from South Korean rivals LG Electronics Inc and Samsung Electronics Co, the financial service firm remained upbeat on the overall smartphone business.

“Mobile data adoption will be the key driver for top line growth at global wireless carriers in our view, helping to offset competitive pricing pressure on commoditizing voice-only revenues. In our view we are in the very early stages of what could be a five plus year cycle of mobile data growth,” analyst Tal Liani wrote in his note.

Smart phones account for only 13 percent of all cellphones, but Bank of America-Merrill Lynch expected “the segment to grow to about 30 percent of total shipments in the next five years.”

Additionally, “wireless carriers and smart phone vendors are heavily marketing their device features directly to subscribers and positioning it as a must-have lifestyle tool, rather than a nice to have gadget,” Liani said.

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