HTC expects weak Q1, recovery in Q2

GROWTH DRIVER::The smartphone maker is counting on the launch of new high-end products to propel its revenues and profitability growth in the second quarter

By Helen Ku  /  Staff reporter

Tue, Feb 05, 2013 - Page 13

Taiwanese smartphone vendor HTC Corp (宏達電) yesterday said that its revenue might drop further in the first quarter, before recovering in the second quarter with the aid of new products.

The Taoyuan-based company said it expected sales to be flat or show a sequential decline to between NT$50 billion and NT$60 billion (US$1.69 billion and US$2.03 billion) this quarter, from NT$60 billion last quarter.

It also forecast that gross margins would be flat or slightly down at between 21 percent and 23 percent, and that operating margin would stay low between 0.5 percent and 1 percent.


While HTC is set to launch new flagship products, called the M7 series, this month, sales are not expected to trend up until next quarter, HTC chief financial officer Chang Chia-lin (張嘉臨) told investors during a conference call.

“We are highly confident that our sales momentum will recover soon with the launch of new high-end products, helping the company post quarter-on-quarter growth,” Chang said.

Chang told investors that HTC is developing “exciting high-end products” aimed at helping the company become a high-end premium brand in the smartphone market.

Asked whether HTC plans to promote more products running Windows Phone 8 rather than phones running Android this year, Chang said the company was seeking a balanced product portfolio, adding that HTC would keep collaborating with operators to drive the sales momentum of the well-received HTC Butterfly and launch “the right products at the right time.”


HTC hopes to regain global market share by selling high-end products in developed markets such as the US, Japan and Taiwan, and launching customized products in emerging markets, he said.

The company’s sales of NT$60 billion last quarter represented a decline of 14 percent quarter-on-quarter and 41 percent year-on-year, with sales in Europe, the Middle East and Africa showing a sequential improvement, while those in South Asia missing forecasts.

Net income fell to NT$1 billion, down 74 percent from the previous quarter and down 91 percent from the previous year with a gross margin of 23 percent and an operating margin of 1 percent, HTC said.

HTC plans to launch multiple products and continue building distribution channels in emerging markets, primarily China, where product life cycles are short, to expand its local footprint, Chang said.

“2013 is very important for HTC to revive sales growth,” Chang said.

“We will be very proactive this year in capturing every opportunity that can lead us to becoming a leading smartphone brand, and we believe we can achieve our goal,” he added.

HTC’s shares closed down 1.55 percent at NT$285.50 in Taipei trading yesterday ahead of the company’s conference call, underperforming the broader market, which gained 0.86 percent.