HTC Profit Drops for First Time in Two Years on Mounting Phone Competition

Posted: 07/01/2012 in Strategy
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HTC Corp. (2498), Asia’s second-largest smartphone maker, posted its first quarterly profit decline (2498) in two years as competing models from Apple Inc. (AAPL) and Samsung Electronics Co. damped demand for its handsets.

Fourth-quarter net income dropped 26 percent to NT$11 billion ($364 million) from NT$14.8 billion a year earlier, the Taoyuan, Taiwan-based company said in a statement today. The average of 11 analyst estimates (2498) compiled by Bloomberg in the past four weeks was for profit of NT$11.6 billion.

Analysts predict sales and shipments will fall further this quarter after the company cut its outlook for revenue in the last three months of 2011. Sales of HTC handsets, including the Sensation, Wildfire and Rhyme, slowed in the fourth quarter as customers opted for Apple’s iPhone and Samsung’s Galaxy models, and the weaker global economy hurt overall demand.

Shipments dropped to 10 million units and will decline to 8.5 million this quarter, according to the median of five analyst estimates compiled by Bloomberg News. HTC sold 13.2 million units in the third quarter and didn’t provide shipment data or estimates for the current or prior quarter.

HTC, which became the largest smartphone seller in the U.S. in the third quarter, on Oct. 31 forecast that fourth-quarter sales would rise as much as 30 percent from a year earlier. It then cut its outlook on Nov. 23, saying revenue would be little changed.

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