Smartphone maker HTC Corp (宏達電) yesterday said it expects net profit to fall to between NT$0.08 and NT$0.47 per share this quarter because of seasonal weakness.
The company posted a net income of NT$500 million (US$15.88 million), or NT$0.57 per share, last quarter — its third consecutive quarter of profit, aided by its expansion into mass markets.
Revenue is expected to decline between 6.05 percent and 13.36 percent to between NT$41.5 billion and NT$45 billion this quarter from last quarter’s NT$47.9 billion.
Photo courtesy of HTC.
That fell short of Barclays PLC’s expectations. The brokerage had forecast a 3 percent sequential growth for this quarter.
HTC chief financial officer Chang Chia-lin (張嘉臨) attributed the expected decline to seasonally slack demand.
However, the company is optimistic that full-year shipments will significantly outpace last year’s figures due to increasing demand from the US, the UK, Germany, India, China and the Middle East, Chang said.
Chang told investors on a conference call that the firm’s sales performance in the US, India, the UK and the Middle East last quarter were very impressive, while revenue from China was flat.
HTC is still assessing the feasibility of tapping into the low-end smartphone segment there, given the intense competition in the Chinese market, Chang said.
Gross margin is expected to fall to between 19.5 percent and 20 percent this quarter from last quarter’s 20.4 percent, Chang said.
HTC’s mid and high-end smartphone products account for more than 10 percent of India’s market, and the company is considering entering the South Asian country’s low-end segment, he said.
The company is also expanding beyond smartphones, with the launch of HTC’s first action camera RE and the announcement of a strategic partnership with US sportswear and accessories company Under Armour Inc as it seeks to broaden its customer reach, he said.
“HTC will launch another non-smartphone product in the next few months,” Chang said, adding that the company hopes the non-smartphone segment’s revenue would grow significantly this year and make material contributions next year and beyond.
Barclays forecast that HTC’s shipments would regain momentum this year, backed by recovering demand in the US, China nd other Asian markets.
“We believe HTC’s strategy changes, including material cost structure improvement and a refocusing on the mid-level smartphone market are finally likely to bear fruit, as volume growth leads earnings recovery for HTC,” Barclays analysts led by Dale Gai (蓋欣山) said in a report on Jan. 19.
Gai upgraded HTC’s rating to “overweight.”
Chang also addressed investors’ concern over a potential chipset supply constraint, saying the company has a good working relationship with Qualcomm and is a “pioneering” company for the US firm’s flagship chipsets.
“We’re very excited about working with Qualcomm Inc and leveraging their high-end flagship chipset solutions,” Chang said.
“HTC feels very comfortable working with Qualcomm and [we] cherish that kind of historical relationship, and we feel very positive going forward,” he said.
Bloomberg News cited sources on Jan. 20 as saying that Samsung Electronics Co, the world’s largest smartphone maker, would use its own processors in the next version of the flagship Galaxy S series, dropping the Qualcomm Snapdragon 810 chip that has overheated in the South Korean firm’s testing.
Additional reporting by CNA
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