Wed, Jul 07, 2010 - Page 12 News List

HTC’s Q2 net profit jumps almost 33%

BEYOND EXPECTATIONSHTC had said in April that it expected second-quarter revenues to grow to NT$50 billion, only to surpass that forecast by NT$10 billion

By Jason Tan and Kevin Chen  /  STAFF REPORTERS

HTC Corp (宏達電), the leading maker of smartphones running on Windows Mobile and Android platforms, yesterday said its second-quarter unaudited net profits were NT$8.64 billion (US$268 million), or NT$11.77 in earnings per share (EPS), thanks to a slew of new phone introductions.

That represented a 32.8 percent rise from NT$6.51 billion, or NT$8.3 a share, in net profit during the ­corresponding period last year.

Revenues jumped 58.5 percent to a record NT$60.53 billion in the second quarter, from NT$38.2 billion a year earlier, according to the company’s statement.

“The second-quarter earnings result is better than our original guidance, as both June and second-quarter revenues continuously hit record highs,” it said.

In late April, HTC said it expected second-quarter revenues to grow to NT$50 billion and handset shipments to rise 50 percent ­year-on-year to 4.5 million units.

HTC’s second-quarter profits of NT$8.64 billion were about 15 percent to 20 percent higher than Citigroup’s forecast and its operating margin of 15.2 percent was 130 basis points higher than the US brokerage firm’s expectations.

“After the June sales report, our third-quarter sales forecast seems very achievable. Given HTC’s current order momentum, we expect HTC’s July/August sales to stay at similar levels to June and September sales to go up strongly on new model introductions,” Citigroup Global Markets analyst Kevin Chang (張凱偉) wrote in a client note yesterday.

HTC has gained in momentum especially with a slew of new phone launches in the second quarter. It debuted the Desire, the Legend, the Incredible and the Evo — its first 4G model tailored for the US market.

“For the second half of 2010, we expect HTC’s component tightness to be alleviated ... With order increases at Qualcomm back in the second quarter and the adoption of Sony’s ‘super TFT-LCD’ panel later in the year, we believe HTC’s component shortage problem will be addressed in the second half of the year,” Chang said.

For new products, Chang said he expected to see HTC’s new Windows Mobile 7 model hit the market in October and its first Android 2.2 (Froyo) handset sometime in the September/October timeframe, as September will be a strong month for new product sales.

In yesterday’s note, Citigroup maintained its “buy” rating on HTC stocks with a target price of NT$600 per share, which implies around 21 percent upside from its closing price of NT$495 yesterday on the Taiwan Stock Exchange.

For the whole year, the brokerage firm expects HTC to reach an EPS of NT$40.

HTC said in a separate release yesterday that it has codes of conduct for component suppliers in order to prevent the latter from exploiting labor.

“We have launched aggressive investigations on the labor disputes,” it said. “We visited the suppliers’ sites for inspection on the work environment, labor safety and remuneration packages.”

The statement didn’t single out which suppliers were visited, but in recent months, Young Fast Optoelectronics Co’s (洋華光電) retrenched employees protested that they were out of jobs as HTC cut orders from the touchscreen-sensor maker.

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