Wed, Apr 25, 2012 - Page 12 News List

HTC forecasts rise in sales and margins

REBORN:While the smartphone maker expects its US business to recover through the fourth quarter, it says the main growth drivers will come from Asia and Europe

By Lisa Wang  /  Staff reporter

HTC Corp (宏達電), the world’s No. 5 smartphone brand, yesterday forecast that revenue would grow by 55 percent sequentially this quarter on expectations that its new HTC One series would help it regain market share in the US and fuel growth in Asia.

Revenue would expand to NT$105 billion (US$3.56 billion) in the current quarter from the first quarter’s NT$67.79 billion — the lowest in six quarters, because of strong competition from Apple Inc. On an annual basis, that would still represent a drop of 15 percent from NT$124.4 billion in the second quarter of last year.

Overall, “the current quarter looks encouraging. Everything we are doing pretty much matches market expectations,” HTC chief executive officer Peter Chou (周永明) told a teleconference yesterday. “We are optimistic about HTC’s future. The first quarter was just a product transition period.”

“We hope HTC One will help us build our brand equity and raise brand awareness among consumers,” Chou said.

The new HTC One family hit the global markets early this month in collaboration with 140 telecoms operators around the world, including AT&T, T-Mobile and China Mobile Ltd (中國移動).

“The market response to the One has been very positive and — combined with regionally focused devices — we believe it will take HTC into its next phase of growth,” Chou said.

Gross margin would improve to 27 percent this quarter from 25.03 percent last quarter, HTC said. Operating margin would also rise to 11 percent from 7.53 percent during the same period.

Chou declined to comment on whether the company had factored into its revenue forecast a chip supply constraint from its major supplier, Qualcomm Inc.

On April 6, HTC reported its worst quarterly net income in seven years. Its first-quarter net profit of NT$4.46 billion was down 70 percent from a historical high of NT$14.83 billion in the previous year because of sluggish demand.

“Over the past two quarters, the major challenges came from the US, mainly from the iPhone 4S,” Chou told investors. “iPhone 4S took a lot of market share from HTC and other [brands]” after other US carriers — Verizon and Sprint — also carried Apple’s latest model.

“That also put HTC’s products under pressure since the fourth quarter of last year,” Chou said.

HTC’s US business should recover gradually from this quarter through the fourth quarter, Chou said, but added that the company was unlikely to regain the 50 percent share of the US market that it had in the past.

“The US market will not be the biggest market for HTC from this year,” Chou said.

Growth from Asian markets like China and Japan and from Europe would, to some extent, offset the decline in the US, Chou said.

“We feel that HTC has been reborn this year,” Chou said, as major restructuring efforts taken last year have helped reshape HTC’s product strategies and strengthen its global sales and marketing execution.

HTC’s board also approved a proposal to distribute NT$40 per share in cash dividends to shareholders based on last year’s net profit of NT$61.98 billion, or NT$73.32 per share.

That translates into a dividend yield of 8.36 percent based on the stock’s closing price of NT$478.50 yesterday.

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