Fri, Jul 04, 2014 - Page 14 News List

HTC posts NT$2.26bn net profit for Q2

SECTOR STUTTER:Its NT$65 billion in sales came amid a trend toward shorter product cycles in the smartphone industry that dented flagship handset sales, analysts said

By Helen Ku  /  Staff reporter

Smartphone vendor HTC Corp (宏達電) yesterday reported its second-quarter net profit of NT$2.26 billion (US$75.5 million), swung from a net loss of NT$1.88 billion the company made in the previous quarter and 80 percent higher than a year earlier.

The company said its earnings per share (EPS) for last quarter improved to NT$2.74 from a net loss per share of NT$2.28 in the previous quarter, beating the NT$0.63 average of 14 analyst estimates compiled by Bloomberg.

Operating profit was NT$2.43 billion last quarter, its first time in positive territory after staying in the red for three consecutive quarters and surpassing a consensus estimate of NT$2.17 billion.

HTC also released its sales for last quarter, showing revenue made in the January-to-March quarter nearly doubled to NT$65.06 billion from NT$33.1 billion in the previous quarter as the company entered a new product cycle with a broader product portfolio.

However, the figure only met the low end of the company’s earlier guidance of between NT$65 billion and NT$70 billion.

While the number beat analysts’ consensus estimate of NT$57.1 billion, sales were 7.97 percent lower than the NT$70.7 billion HTC recorded a year earlier.

The Taoyuan-based HTC did not elaborate on its financial performance nor release its shipment volume for last quarter.

The annual sales decline could be a result that smartphone product cycles have become shorter, an issue confronting not just HTC, but all major brands.

Taipei-based CIMB Securities Ltd analysts Wang Wanli (王萬里) and Felix Pan said in a report dated June 17 that HTC's sales momentum had slowed after it launched its flagship One M8 model two months ago.

“We believe that this is an issue that affects all Android smartphone vendors. We observe that the smartphone product lifecycle is getting shorter due to product homogeneity,” he said in the report.

On May 6, HTC chief financial officer Chang Chia-lin (張嘉臨) told investors in a conference call that the M8 was outselling its predecessor M7 from sell-in and sell-out perspectives. The M8 and HTC’s latest mid-tier Desire 816 smartphone are expected to drive the company’s sales through the second half of the year, he said.

Even so, CIMB estimated the company shipped just 5.8 million units over the past three months, up from 3.1 million units in the first quarter, but down from 6.6 million units a year ago.

With shipments estimated to shrink next quarter to 4.5 million units, HTC’s third-quarter sales could drop to NT$45.4 billion with net losses of NT$1.4 billion, according to CIMB.

Shipments for the whole year are estimated to contract 10 percent to 18 million units from 19.8 million last year, with the brand likely to remain unprofitable for the second consecutive year at estimated losses of NT$2.3 billion, CIMB said.

HTC shares added 0.4 percent to close at NT$137 in Taipei trading before the company released its results.

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