Technology Stocks : Smartphones: Symbian, Microsoft, RIM, Apple, and Others

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From: Eric L4/24/2012 10:29:37 AM
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HTC in Q1 2012 ...

The Q1 HTC financial results are in. It was a tough quarter for them relative to prior quarters. Oddly I can't find a unit sell in number and ASP for them. Through Q3 2011 this data was spelled out in the earnings press release and more detailed quarterly Business Review which is used with the conference call. This is the Q3 2011 Business Review which has considerably more detail than the Q1 2012 linked further on ..

The Q3 2011 Earnings Release reported handset shipments of 13.2mn units (up 93% year-on-year)
with ASP of US$344 (up 0.6% year-on-year). It also had considerably more detail than Q1 2012 Earnings Press Release ...

HTC Reports 2012 First-Quarter Results
HTC Press Release
Taoyuan, Taiwan, April 24, 2012 – ###

HTC Corporation 1Q 2012 Business Review (10 Page PDF)
Chialin Chang (CFO)
April 24, 2012

1Q 2012 Financial Highlights

– Revenue was NT$67.79bn
– Gross margin and operating margin were 25.03% and 7.53%, respectively
– Net income was NT$4.47bn
– Revenue decline result of product transition cycle, gross margin impacted by margins of older products, lowered scale contributing to lower operating margin

<Big Snip> ... Note: Some tables from this report are in Larry Dignan's article clipped below.


•Revenue is expected to be around NT$105bn
•Gross margin is expected to be around 27%
•Operating margin is expected to be around 11% ###

>> HTC: One X, China Fueled Rebound Ahead?

Larry Dignan
April 24, 2012

HTC argued that the One smartphone family and China are its ticket to a roaring comeback. Analysts are mixed.

HTC reported a dismal first quarter as expected and projected a rebound courtesy of the smartphone maker’s One family. Executives indicated that a solid launch of the HTC X One better reflects the company’s competitive position.

The catch? HTC’s competitive position will be better known once its new product lineup goes against Samsung’s latest Galaxy device and Apple’s iPhone 5.

For now, HTC was all about a dreadful first quarter. HTC had foreshadowed that times would be tough. These charts illustrate how tough.



In the second quarter, HTC projected a sequential revenue rebound with revenue of NT$105 billion and gross margins of about 27 percent. That projection was in line with consensus estimates, but lower than some analysts expected.

CFO Chialin Chang’s presentation honed in on the One X launch. Chang’s key points:

• HTC’s One family broadly cover the U.S. market with LTE speeds.
• HTC One and Desire V series bolster the company’s position in China.
• HTC J add to the company’s position in Japan.

Deutsche Bank analyst Kc Kao said in a research note:

Management said that the execution of One X models better reflects its competitive position. It also highlighted three qualitative factors it believes should demonstrate its competitive positive in the smartphone space: 1) innovation, brand, technology leadership; 2) customer relationships; 3) high-quality employees.

HTC also emphasized that the importance of the U.S. market is diminishing. The U.S. accounted for 40 percent to 45 percent of HTC sales in 2011. In 2012, Kao estimated that the revenue contribution from the U.S. will be 30 percent to 35 percent due to the iPhone.

Overall, the jury is still out on HTC’s rebound. Macquarie analyst Daniel Chang said he expects HTC to move 10 million to 11 million units in the second quarter, which isn’t that great considering the company’s marketing push.

HTC CEO Peter Chou was upbeat about the company’s prospects in China, but Chang wasn’t so sure. In a research note, he said:

We agree that China’s potential is significant, but are concerned that HTC may be too optimistic and believe it needs time and more marketing effort to build its brand. There are several local ‘kings’ (Huawei or ZTE) in China while Samsung and Nokia have already established channels as well. We think by the time HTC is ready, the China market will already be very mature with severe competition and lower device profitability. Today, HTC’s market share is still low at 2-3% vs. Chinese local brands’ combined 30%+ and Samsung’s 24% and Nokia’s 20%. This implies that Chinese smartphone users either go for low cost phones or a strong brand – neither of which we think HTC has yet in China. ###

>> HTC Sees Recovery but No Return to U.S. Peaks
Clare Jim and Argin Chang
Reuters (Taipei) April 24, 2012

Taiwan smartphone maker HTC Corp won't have the United States as its largest market from this year, a sign of how far it has fallen and how much more work it has to do in Asia to regain share lost to rivals Apple Inc and Samsung Electronics.

Chief Executive Officer Peter Chou forecast better times ahead for the company after a slump in the first quarter, but said HTC won't return to the days when more than 50 percent of its revenue came from the United States.

"A major challenge we faced last year was the big drop in sales in the U.S. because of competition from the iPhone 4S," Chou told an analysts' briefing on Tuesday on the company's first-quarter results released earlier in the month. He did not elaborate.

Former contract maker HTC had a fairytale ride in 2010 and early 2011, when its shares more than tripled in the 14 months to April 2011, reaching T$1,238.10. The company's sales grew four-fold in 1-1/2 years as consumers snapped up its innovative phones with their distinctive large clock numerals. But it suffered an equally rapid fall from grace as its phones failed to keep up with Apple's iPhones and Samsung's Galaxy range.

HTC reported a 70 percent tumble in net profit in the first quarter to T$4.464 billion ($151.5 million), just below forecasts, early this month.

Chou's comment on the U.S. market is a symbol of that fall, though HTC remains upbeat and forecast a 55 percent jump in revenue in the second quarter to T$105 billion ($3.56 billion). That is up from the first quarter's T$67.79 billion, and in line with the median T$101.46 billion in a poll of 21 analysts by Thomson Reuters I/B/E/S. HTC also expects gross margin and an operating margin of around 27 percent and 11 percent, respectively, improving from 25.03 percent and 7.53 percent in the previous quarter.

Difficult War

It launched its new One series of models in April, banking on their advanced cameras offering photography on a par with traditional digital cameras, as well as music features such as advanced audio technology, to regain market share lost to iPhones and Galaxy.

"The guidance on revenue looks acceptable; it's a figure that has taken all the risks into account," Barclays Capital analyst Dale Gai said, but he added that the forecast on operating margins was lower than market expectations.

"This is a difficult war; the market will be focusing more and more on HTC's profit and value. HTC has said it will return to normal levels, but I don't think it will be able to go back."

However, challenges remain. Pacific Crest analyst James Faucette said in a report last week sales of HTC's One X and S products have not increased meaningfully in Western Europe.

Also, the earlier than expected roll-out of Samsung's new smartphone in the Galaxy series will also leave HTC less time to grab back share. The Korean smartphone maker is set to launch the Galaxy S3 in London on May 3, a month earlier than expected.

Apple's new iPhone 5, which is expected to be on the market in the third quarter, will be another strong rival. Barclays' Gai suggested that the iPhone 5 could mean an up to 10 percent downside to HTC's 2012 earnings per share.

But HTC's Chou painted an upbeat picture of the coming year.

"I feel that HTC is being reborn this year, in terms of product strategy and execution of global sales and marketing. We are a new HTC; HTC One will help us to reach this goal."

He indicated that the company was looking to China to make up for lost share, saying he expects to see material sales this year, the third year of the company's entry into the country.

However, he reiterated that the company will not launch 1,000 yuan ($160) low-end smartphones, focusing on the 1,999-2,129 yuan range.

On Tuesday, HTC closed up 1.16 percent at T$478.50, versus the broader market's 0.24 percent rise.

The shares had reached a high of T$1,238.10 at the peak of the company's it end the year boom in April 2011, before investors' loss of confidence saw down 42 percent, the worst share performance among global smartphone makers. ###

The SI HTC Board is here ...

Subject 58276

- Eric -
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