HTC Corp (宏達電) yesterday revised downward its revenue growth forecast for this year to mid single-digits from its previous 10 percent estimate, raising concerns for the smartphone maker’s growth momentum in coming months.
The projected cut in full-year revenue was primarily caused by product delays in China in the second half, lackluster demand on both its Microsoft Corp’s Windows Mobile and Google Inc’s Android platforms, as well as its less than stellar momentum in China’s third-generation telecom market, the company told investors.
“Unit sales growth will also slow down to low-to mid-single digits, while gross margin will remain at 30 percent to 32 percent year-on-year,” HTC chief executive officer Peter Chou (周永明) said.
The cut indicates HTC’s Windows and Android-based phones are facing increasing competition from Apple Inc’s iPhone and Palm Inc’s Pre, Lu Chia-lin (呂家霖), an analyst at Macquarie Group Ltd, told Bloomberg yesterday.
“It totally surprises me on the downside,” Lu said. “At first they expected Android products could help, but now many operators are scaling back their expectations.”
HTC is the world’s biggest smartphone maker using the Windows operating system. With increasing competition from global rivals, the company now expects its third-quarter revenue to be between NT$34 billion (US$1 billion) and NT$36 billion, down from NT$38.20 billion in the second quarter.
In the second quarter, HTC’s net profit declined 1.7 percent year-on-year to NT$6.50 billion, or NT$8.73 per share, but was up 33.4 percent quarter-on-quarter. The company expects full-year EPS to fall somewhere in the NT$30 range.
HTC said operating expenses would increase as it plans marketing campaigns during the holiday season to build brand awareness among consumers.
“Although we have garnered much brand awareness in the last two to three years owing to innovations in the Windows Mobile sphere, as well as being the leader introducing the Android platform, it is still not enough compared with top global brands,” Chou said.
Since the beginning of the year, the smartphone maker has entered the mid-tier smartphone category with handsets priced at less than US$300, from its previous high-end focus on mobile phones retailing at more than US$400.
Even though the average selling price (ASP) has declined steadily since third quarter of last year dropping to US$357 in the second quarter from US$364 in the first, Chou said mid-tier handsets are not to blame, but rather mediocre platform momentum and handset delays in China into next year.
“Investors will see revenue contributions from mid-tier priced products exceeding 50 percent in the second half, as the category becomes mainstream,” HTC’s chief financial officer and spokesman Cheng Hui-ming (鄭慧明) said.
Chou did not say when the public would see more mid-tier phones from HTC. He said the company would definitely not enter the low-end phones sector.
The shares traded down NT$0.5 at NT$447.5 yesterday prior to the investor conference call.
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