Tue, Aug 02, 2011 - Page 12 News List

HTC tops second quarter Android phone market in US

By Kevin Chen  /  Staff Reporter, with CNA

Given HTC Corp’s (宏達電) aggressive model launches in the first half of the year, the company has seen its sales grow faster than the smartphone industry as a whole on average, but analysts said the company’s earnings growth would likely slow next year because of strong competition.

A recent survey by US-based research group Nielsen showed that the Taiwanese smartphone maker remained the top Android smartphone vendor in the US in the second quarter, with a 14 percent market share. It was followed by Motorola Inc with an 11 percent market share and a 8 percent share for Samsung Electronics Co, the survey showed.

HTC’s strong performance came after the company teamed up with No. 1 US telecoms operator Verizon Wireless Inc to sell the HTC Thunderbolt for the high-speed long-term evolution (LTE) network, it partnered with the second-largest US telecoms operator AT&T Inc to sell HTC Inspire 4G for the HSPA+ network and the firm launched its HTC EVO Shift 4G with Sprint Nextel Corp, the No. 3 US telecoms carrier, for WiMAX network users.

The Thunderbolt, Inspire 4G and EVO Shift 4G all use the Android operating system.

HTC’s Windows Phone 7 devices also accounted for 6 percent of the US market, giving the company a combined 20 percent smartphone market share in the US, tied for second with Research in Motion (RIM) Ltd, according to Nielsen.

Even so, Citigroup said HTC faced challenging market conditions ahead in light of Apple’s potential launch of a mid to low-end iPhone in the second half, as well as Samsung’s aggressive marketing strategy and product launches over the past few months, while Nokia now has a much smaller smartphone business to lose to other vendors.

“We believe it would be difficult for HTC to maintain its market share momentum without sacrificing its average selling price and margin at a larger magnitude,” Citigroup Global Markets analyst Kevin Chang (張凱偉) said in a client note yesterday.

Chang’s remarks came after HTC on Friday delivered strong second-quarter sales and profits to investors and told analysts in a teleconference that the company would pay more attention to earnings per share and return on equity, rather than average selling price and margin.

“In our view, that argument makes sense if HTC can continue to deliver strong top-line growth next year. However, we believe strong top-line growth could be difficult given rising competition, deteriorating [product] mix and slower industry growth,” Chang said.

While HTC may still enjoy a strong balance sheet, cash flow and one of the highest returns on equity among Taiwanese tech companies, “when a hyper-growth company faces sharp earnings growth deceleration, [the] share price seldom performs,” Chang said. “Moreover, we believe the uncertainties of the legal dispute between HTC and Apple may depress the price-earnings multiple until the legal dispute has been resolved.”

However, Credit Suisse said -concerns about HTC’s litigation issues and the company’s market fundamentals appeared to be “over done” and it was still confident that the firm would achieve moderate gains to maintain its tier-1 smartphone position, according to a separate note issued by analyst Pauline Chen (陳柏齡) yesterday.

“We still believe a settlement is more likely than a product ban and it is likely a higher royalty payment for HTC,” Chen said in the note.

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