Sat, Aug 04, 2012 - Page 13 News List

HTC warns of double-digit sales drop

STRATEGIES:The smartphone maker said it would continue to develop innovative products and strengthen partnerships with telecoms operators to build up business

By George Liao  /  Staff reporter

HTC Corp (宏達電), the world’s No. 5 smartphone brand, yesterday said revenue could shrink by as much as 23 percent sequentially to NT$70 billion (US$2.33 billion) this quarter because of a weak macroeconomy and stiff competition.

Sales would decline in all regions except China, a company executive told investors.

Overall revenue would slip to between NT$70 billion and NT$80 billion, from last quarter’s NT$91.04 billion, the company said.

Gross margin would slide to 25 percent this quarter from 27.01 percent in the prior quarter, because of falling prices and increased sales of lower-margin handsets in China. Operating margin would also drop to 7 percent from 9 percent, it said.

“We saw growth in China, but declines in varying degrees in other regions,” HTC chief financial officer Chang Chia-lin (張嘉臨) told investors yesterday. “Specifically, we saw challenges in EMEA [Europe, the Middle East and Africa].”

Chang attributed the revenue drop to “overall macroeconomic softness and fierce competition.”

Last quarter, HTC’s net profit plunged 57.8 percent year-on-year to NT$7.4 billion, from NT$17.52 billion, the company said early last month. However, on a quarterly basis, its net income jumped 65.7 percent from the first quarter’s NT$4.47 billion.

Chang said HTC would continue to develop innovative products and strengthen its competitiveness through its strong partnerships with telecoms operators and distribution channels.

Asked about the company’s move to downsize its overseas research and development centers and sales offices, Chang said it was not a move to cut costs, but was rather a part of an ongoing organizational optimization.

“HTC is now very focused on allocating the right resources and human capital to focus on key growth areas, which is not limited to China and emerging markets, but also developed countries, where we need to develop deeper brand awareness,” Chang said.

“With growing brand awareness, strong operator partnerships and increasing retail presence, China is well positioned to become a key growth driver,” an HTC statement said.

Chang also commented on HTC selling back nearly half of its stake in high-end headphone maker Beats Electronics LLC.

“We think Beats’ founding members and the management team have the vision and managerial expertise to lead the company to become a successful global brand, which would increase its share value, and HTC, as a 25 percent shareholder, will benefit tremendously. We want to give them more flexibility to take Beats to the next level,” he said.

The smartphone maker also announced that Mike Woodward, a former vice president of AT&T’s consumer wireless devices division, had been appointed president of its North American division, taking charge of the company’s sales, marketing and operations for the US and Canadian markets.

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