HTC Q1 profit sinks by 70 per cent

HTC expects the company's earning will pick up in the second quarter

High Tech Computer reported a 70 percent year-on-year fall in net profit for the first quarter on Friday, as the Taiwanese handset maker transitioned to a new line of smartphones it hopes will lift earnings.

HTC's first-quarter net profit totalled NT$4.46 billion (US$150 million), down from NT$14.8 billion a year earlier. Revenue for the quarter fell by 35 percent year on year to NT$67.7 billion.

The company expected to see sagging financial results for the first quarter, after also reporting a disappointing fourth quarter, when profit declined by 26 percent year on year.

Last year, the company saw increased competition from Apple, which made its newest iPhone available for the first time with U.S. carrier Sprint last October. This, along with HTC's lack of a definitive flagship device, hurt the company's smartphone sales, according to research firm Gartner.

HTC, however, hopes to change its fortunes by releasing its new HTC One series of smartphones. The devices will reach the market in several countries, including the U.S., during the second quarter.

"With our new product cycle we should regain our business momentum," HTC CFO Winston Yung said in conference call in February, adding that the company's earnings will return to normal in the second quarter.

HTC's success with its new line of smartphones, however, will depend on the kind of devices rival handset vendors Apple and Samsung bring to market, said Gartner analyst CK Lu.

"The photo shooting and the other improvements to the (HTC One X) all look very good, and we think it will be well received by customers," he said."But it's really about how HTC can compete with the new iPhone and the new Samsung Galaxy, so we will have to wait and see." Those phones have yet to be announced.

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Michael Kan

IDG News Service
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