HTC Corp (宏達電), the world’s No. 5 smartphone maker, yesterday said it was on track to meet its targets in the Asia-Pacific region, including a four-fold growth in its handset sales in China this year.
After winning strong support from US and European telecoms operators from T-Mobile to Vodafone, HTC recently refocused on Asian markets, its home turf, to seek more growth.
“We are on the right track to hit our aggressive target,” Jack Tong (董俊良), who oversees HTC’s business in the North Asian region that includes Taiwan, Hong Kong and China, told reporters yesterday.
“We are seeing strong growth momentum carrying into the third and the fourth quarters,” Tong said, adding that the uptake of smartphones has exceeded most telecoms operators’ expectations, despite uncertainty in the global economy.
“And we expect that next year will be another exciting period for us, given strong growth momentum,” he said.
In July, HTC chief executive Peter Chou (周永明) told investors at a meeting that the company aimed to grow its Chinese sales four-fold this year from last year, without providing a detailed forecast.
To boost sales, HTC has worked to expand its retail outlets and build stronger partnerships with Asian telecoms operators using different telecoms technologies, such as companies offering CDMA technology from China’s China Telecom Corp (中國電信) and Taiwan’s Asia Pacific Telecom Co (亞太電信).
“We are exploring growth in closing loopholes,” Tong said. “We’ve made breakthroughs in the CDMA market, which has long been dominated by Samsung and LG.”
Last month, HTC said it planned to more than triple the number of its retail outlets in China to 2,000 by the end of this year, from its current 650 stores.
Yesterday, HTC and Asia Pacific Telecom jointly unveiled the Android-powered WildFire S smartphone in Taiwan, following the phone’s debut in the US and China earlier this quarter.
This is the first HTC smartphone to hit Asia Pacific Telecom’s store shelves, with its 31 million subscribers.
Asia Pacific Telecom is struggling to catch up to rivals in upgrading its network to high-speed 3.5-generation technology because it faces greater risks in switching its equipment supplier to Ericsson, or Alcatel-Lucent from China’s Huawei Technologies Co (華為) after the nation’s telecoms regulator, the National Communications Commission, recently banned Taiwanese firms from using Huawei equipment, citing national security concerns.
Asia Pacific Telecom expected to start offering high-speed data-oriented services on a 3.5G network in the second half of next year at the earliest.
Separately, JPMorgan downgraded HTC to “neutral” from “out-perform” on weak demand from the US, which accounted for half of HTC’s revenues, threats from Apple Inc’s lower-priced older versions of iPhones and possible heavy investment in its own operating system, according to a report dated on Monday.
“In recent weeks, we believe HTC has seen order weakness in three out of four US operators, namely AT&T, Verizon and T-Mobile,” JPMorgan analyst Alvin Kwock (郭彥麟) said in the report.
“As the market starts to factor in some probability of a recession scenario, it is important to note that during the past recession, even smartphone growth was less than 10 percent for four quarters,” Kwock said.
Kwock trimmed HTC’s net profits this year by 3.7 percent and by 14 percent next year to NT$68.41 billion and to NT$68.91 billion. That led to a drastic cuts of HTC’s target price to NT$800 from NT$1,450 over the next 12 months.
The new target price suggested a less than 4 percent upside, compared with HTC’s closing price of NT$770 yesterday after tumbling 4.94 percent. The benchmark TAIEX plunged 2.88 percent.
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