HTC Corp (宏達電), the world’s No. 4 smartphone brand, yesterday said its quarterly net profit fell 25.55 percent from a year earlier on lower-than-expected revenue because of intense market competition.
Fourth-quarter net income contracted to NT$11.02 billion (US$364.36 million), or NT$13.13 per share, from NT$14.8 billion, or NT$18.26 per share, in the same period last year, according to a company statement.
On a quarterly basis, net profit in the October-to-December period fell 41 percent from NT$18.68 billion, or NT$22.07 per share, from the previous three months.
Consolidated sales dropped 2.49 percent from the previous year to NT$101.42 billion, missing the company’s revenue target of NT$104 billion made in November.
HTC slashed its fourth-quarter revenue outlook on Nov. 23 last year, saying sales could drop by as much as 23 percent from the third quarter to NT$104 billion, compared with an earlier forecast of between NT$125 billion and NT$135 billion.
Analysts attributed the sales drop in the fourth quarter to slowing demand in the face of rising competition from products by Apple Inc of the US and Samsung Electronics Co of South Korea.
“Apple’s iPhone 4S and Samsung’s Galaxy S II continue to sell very well,” Steven Pelayo, regional head of Asian-Pacific technology research at HSBC Securities, said in a research note. “HTC and RIM [Research In Motion Ltd] appear to be suffering from a market share shift to lower-end products and other vendors.”
Because of intensified market competition, Macquarie Securities predicted that HTC’s shipments would drop by another 20 to 30 percent sequentially in the first quarter of this year despite a low comparison base.
Macquarie’s shipment forecast was lower than market consensus estimates of a 10 to 15 percent quarter-on-quarter decline.
Margins are also at risk as the company’s strategy of focusing on research and development, in-house manufacturing and aggressive brand building affect shipments, Macquarie said in a report on Thursday.
The brokerage house said Apple’s and Samsung’s products would continue to pose a threat to HTC’s sell-through momentum in the near term, but that HTC’s Facebook phone, scheduled for release in May or June, could be a potential revenue driver in the second half of the year.
Macquarie cut its target price for HTC to NT$450 given the forecast slower momentum in the first quarter.
For the whole of last year, HTC’s consolidated sales jumped 67.1 percent to NT$465.8 billion and earnings hit NT$62.05 billion, or NT$73.38 per share, from NT$39.53 billion, or NT$48.49 per share, a year earlier, company data showed.
HTC’s shares dropped 0.72 percent to NT$482 yesterday, Taiwan Stock Exchange data showed.