Tue, Apr 08, 2014 - Page 13 News List

HTC Corp posts NT$1.88bn Q1 loss

UPS AND DOWNS:The devicemaker is looking to its new flagship M8 model and mid-tier Desire 816 handset to stem the slide, as losses reached NT$2.28 per share

By Helen Ku  /  Staff reporter

Smartphone vendor HTC Corp (宏達電) yesterday reported a quarterly loss of NT$1.88 billion (US$62 million), while reiterating its confidence on sales of new phones to help it return to profitability this quarter.

The figure represents losses of NT$2.28 per share, in line with the company’s forecast range between losses of NT$2.1 and NT$2.6 per share as HTC told investors in February by telephone.

“The company expects to see a positive trajectory in its revenue in April from March, and forecasts quarter-on-quarter revenue growth in the second quarter, driven by strong market demand for its new products, including flagship HTC One [M8] and mid-tier flagship Desire 816,” HTC said in an e-mailed statement yesterday.

“The company expects to return to profitability in the second quarter, as indicated on the earnings call on February 10,” it added.

Yesterday, HTC also released revenue figures for last month. Revenue rose 2.16 percent annually to NT$16.23 billion from NT$15.88 billion a year ago. On a monthly basis, revenue surged 124 percent from NT$7.23 billion in February as it entered a new product cycle.

In the first three months of this year, revenue of NT$33.12 billion plunged 44.8 percent sequentially, from NT$60 billion in the fourth quarter last year.

That was a disappointment as HTC told investors in February that revenue would grow sequentially last quarter as sales of new products would fuel growth.

Barclays analyst Dale Gai (蓋欣山) said it remained uncertain whether HTC could sustain sales momentum to improve its profitability.

“HTC may be able to turn profitable this year after posting net losses of NT$1.32 billion last year, because of the company’s adjustments to its product strategies,” Gai said by telephone.

“However, HTC’s long-term outlook remains unclear, as the market is reaching saturation,” Gai said. “The saturation phenomenon is an issue that every brand would have to face, including Apple Inc and Samsung Electronics Inc.”

Citing studies by Barclays, Gai said HTC’s flagship product sales volume was estimated to drop to about 6 million units this year from 7 million units last year because of weakening market demand for high-end smartphones.

In addition, though the company’s new M8 flagship product is well-designed, replacement demand for the smartphone model may not be that strong, given its high price and lack of “wow factors” beyond dual rear cameras, Gai said.

Gai forecast HTC would report two more months of sequential growth in revenue until May.

This quarter, HTC’s revenue is expected to grow 60 percent quarter-on-quarter to about NT$53 billion, driven largely by the flagship M8 model in the US and European countries, as well as the its mid-tier Desire 816 in emerging markets like China, Gai said.

Shipments were expected to stay at about 20 million units globally this year, supported mainly by increases in the mid and low-end segments, he forecast.

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