HTC, THE world’s fourth biggest smartphone maker by shipments, is expecting another big fall in sales in the first quarter of this year as it scrambles to find its next hit phone.
The Taiwanese company had seen sales drop by 22 per cent from the third to the fourth quarter of last year. It said yesterday that it expects revenues to fall by a further 35.5 per cent in the first quarter, to between 65 and Taiwanese $70 billion.
Operating margins will fall to 7.5 per cent, compared to 14.8 per cent for the full year last year.
HTC had risen quickly to become one of the top producers of smartphones using Google’s Android operating system, but in recent months it has struggled as competition from Samsung and Apple intensified, particularly in the US.
Winston Yung, chief financial officer, said: “The sales we had originally expected for our high-end phones did not really materialise . . . our product offering in the fourth quarter could have been better.’’
To counter the popular new models from Samsung and Apple, HTC had moved quickly to offer phones based on LTE, a fourth-generation network that allows for faster transfer of data.
However, sales of these devices have not been satisfactory, in part because of the short battery life of HTC’s LTE phones, Mr Yung said. US consumers have also not switched to the faster networks as quickly as HTC had expected.
Mr Yung stressed, however, that the company’s big drop in revenue for the first quarter “is not normal’’, and that sales would pick up again, and profit margins return to early-2011 levels, by the middle of this year.
The weak results “primarily reflect weakness in the US [for HTC], which is a result of competition from Apple and Samsung. In Europe there is not such intense competition and our decline is not as big. In Asia, particularly in China, we are growing rapidly,” Mr Yung added.
HTC's January revenues, which were also announced yesterday, were just Taiwanese $16 billion, less than half of January last year. – (Copyright The Financial Times Limited 2012)
