Sat, Jul 07, 2012 - Page 13 News List

HTC’s second-quarter net profits plunge 58 percent

FIERCE COMPETITION:The firm is struggling to keep up profits in an intensely competitive market, but says it will renew efforts in emerging markets to rake in revenue

By Kevin Chen  /  Staff reporter

HTC Corp (宏達電) yesterday said its second-quarter net profit fell 57.77 percent from a year earlier, as the Taiwanese company continued to find it difficult to maintain its foothold in an increasingly competitive smartphone market amid a dismal global economic outlook.

Net income in the second quarter reached NT$7.4 billion (US$247.3 million), or earnings per share of NT$8.9, the Taoyuan-based firm said in a statement.

NUMBERS

While the figure represented a 65.55 percent rise from the NT$4.47 billion profit, or NT$5.35 in earnings per share, it made in the first quarter, it lagged far behind the NT$17.52 billion profit, or NT$20.64 per share, it made the year before, according to company data.

Consolidated revenue in the April-to-June period was NT$91 billion, falling 26.85 percent from the NT$124.4 billion the company posted a year earlier, HTC said in the statement.

The second-quarter number met the company’s revised guidance issued last month and was 34.24 percent higher than the NT$67.79 billion it made in sales in the previous three months.

TARGET SLIDES

On June 6, HTC adjusted down its second-quarter revenue target to NT$91 billion, 13.3 percent less than the NT$105 billion it forecast in May. At the time, the company attributed the revisions to slower-than-expected sales in Europe and delayed shipments to the US.

HTC did not elaborate on its second-quarter performance in the statement yesterday, nor did it provide sales guidance for this quarter.

Grand Cathay Investment Services Corp (大華投顧) yesterday forecast that HTC’s sales for the third quarter would be flat from the second quarter because of a product transition.

HTC’s share price has plummeted 75.23 percent from a high of NT$1,300 in April last year to close at NT$322 in Taipei trading yesterday.

Analysts have predicted that competition from Samsung Electronics Co’s Galaxy S III smartphone and the planned new iPhone from Apple Inc, as well as global economic uncertainties will constitute serious obstacles for HTC’s efforts to increase its sales and regain market share in the second half of the year.

In a bid to reassure nervous investors, HTC chief executive Peter Chou (周永明) said at the company’s annual general meeting on June 12 that the company would strengthen the integration of its marketing channels in emerging markets — especially China — to support its bottom line in the remaining quarters of the year.

BLEAK OUTLOOK

Nonetheless, three foreign brokerages yesterday maintained their bearish view on the company’s prospects in the near term, with Citigroup cutting its 12-month target price to NT$250 from NT$310, UBS Securities lowering its target price to NT$280 from NT$320 and Nomura Securities issuing a “sell” recommendation on the stock with a target price of NT$260.

Additional reporting by George Liao

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