Mon, Jul 09, 2012 - Page 13 News List

HTC dismisses job-cut rumors amid fall in earnings

By Kevin Chen  /  Staff reporter

Smartphone maker HTC Corp (宏達電) yesterday denied a local newspaper report that it is axing some of its temporary jobs in Taiwan in response to the company’s falling market share and earnings.

“The market speculation of job cuts at HTC is untrue,” chief financial officer and spokesman Chang Chia-lin (張嘉臨) said in a filing to the Taiwan Stock Exchange.

The report, printed by the Chinese-language United Evening News on Friday without cited sources, said the Taoyuan-based company has terminated some temporary jobs at its domestic plants and restructured its overseas offices and research centers.

On that same day, HTC reported its second-quarter net profit fell 57.77 percent from a year earlier to NT$7.4 billion (US$247.3 million), or earnings per share of NT$8.9, while consolidated revenue in the April to June period was NT$91 billion, falling 26.85 percent from the year before.

Contradicting market rumors that HTC is slashing temporary jobs to cope with its sagging sales, the world’s No. 5 smartphone vendor said the cuts were just the firm’s response to short-term workforce demand and not indicative of anything unusual.

“The company is not renewing contracts with workers when their contracts expire,” Chang said in the filing, denying layoff speculation.

At the height of its smartphone business, HTC expanded its global reach and increased its research and development centers in the US.

However, the company is facing intensified competition from Apple Inc and Samsung Electronics Co, while its weakening position in overseas markets is forcing the Taiwanese company to rethink its global strategy.

“To improve operational efficiency and enhance core competitiveness, HTC is undergoing organizational restructuring and workforce adjustment at its offices in Brazil and in North Carolina, the US,” HTC said in the filing yesterday.

The company closed its office in Brazil last month, affecting 30 employees in Sao Paulo, and wound down a research and development center in Durham, North Carolina, which eliminated about 50 jobs.

On Friday, Citigroup Global Markets analysts Kevin Chang (張凱偉) and Jonathan Gu (古嘉元) said in a note that HTC would face further market share erosion and more headwinds to its earnings prospects in the second half of the year because of the release of Samsung’s Galaxy S III smartphone and the planned new iPhone from Apple.

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