|HTC's Unaudited Q2 2012 Results ... |
* Q2 revenue T$91 bln ($2.98 billion USD) vs Q1 T$67.79 bln and down 27% from NT$124.40 billion a year ago.
* Q2 net profit T$7.4 bln ($247 million USD), down 57.8% from NT$17.52 billion a year earlier.
>> HTC's Profit Falls 58%
Lorraine Luk (Taipei)
The Wall Street Journal
Friday July 6, 2012
HTC Corp. said Friday its unaudited second-quarter net profit fell 58% from a year earlier, as the Taiwanese smartphone maker struggles to compete with industry leaders Apple Inc. and Samsung Electronics Co.
HTC said in a statement its unaudited net profit for the three months ended June 30 was $7.40 billion New Taiwan dollars ($247 million), down from NT$17.52 billion a year earlier. Its revenue dropped 27% to NT$91.0 billion from NT$124.40 billion.
In the rapidly evolving market for smartphones, HTC has been losing ground against Apple and Samsung. In the U.S., HTC's smartphones, which run on Google Inc.'s Android operating system, were the strongest competitors against Apple's iPhone in 2010, when many mobile users were still replacing their traditional cellphones with smartphones. But fast-rising Samsung last year overtook HTC in the U.S. market to become the biggest vendor of Android-based smartphones.
In stark contrast to HTC's weak earnings, Samsung said earlier Friday that it will likely post a record quarterly operating profit for the second quarter that ended June 30. The South Korean electronics giant, which is due to release audited results later this month, expects an operating profit of between 6.5 trillion won ($5.7 billion) and 6.9 trillion won for the quarter, compared with 3.75 trillion won a year earlier.
Analysts said HTC's business outlook is increasingly tough amid intensifying competition and uncertainties over the global economy.
"HTC's third-quarter outlook is dim as competition is still fierce, with new smartphones from Samsung and Apple," said Yuanta analyst Dennis Chan.
Samsung launched its new flagship smartphone, the Galaxy S III, in Europe in May. Apple is expected to launch its next-generation iPhone later this year.
Mr. Chan said he expects HTC's third-quarter revenue to be about the same as the second-quarter figure.
HTC's weakening position in the U.S. is forcing the company to rethink its strategy and focus more on other markets.
HTC doesn't disclose its geographical revenue breakdown, but analysts said the U.S. likely accounted for about half of the company's revenue and about 40% of its total smart phone shipments last year.
While the company has been turning to Asia and other emerging markets for growth, competition is also intensifying in those markets.
In China, the world's biggest smartphone market, HTC will likely face more competition from local handset makers such as ZTE Corp. and Huawei Technologies Co. Huawei and ZTE, which have been strong in the low-end segment, are trying to sell more high-end models. ###
>> HTC profit lags forecasts, faces challenges in Q3
Friday July 6, 2012
* Q2 net profit T$7.4 bln, down 57.8 pct from year ago
* Q2 revenue T$91 bln vs Q1 T$67.79 bln
* HTC shares shed 5.15 pct ahead of results
* Does not renew contracts for some production workers
Taiwan smartphone maker HTC Corp saw profit more than halve in the second quarter after European sales disappointed and phones destined for the U.S. market were held up by customs inspections.
The profit fall came on the same day that archrival Samsung Electronics posted record second-quarter earnings, driven by runaway sales of its Galaxy smartphone , indicating the size of the challenge facing HTC as it looks to recover market share.
HTC is betting on its new One series of phones to regain market share lost to Samsung and Apple Inc. HTC, whose sales have grown four-fold since 2010, was battered in the second half last year by the popularity of the iPhone and Galaxy models.
HTC's chief executive, Peter Chou, said in an interview last month that the company will launch other new models in the second half of this year.
But some analysts predict HTC will be upstaged by strong sales of the Galaxy S III and the latest iPhone, which is expected to launch in the fourth quarter.
"In the high-end market, there are Samsung and Apple. In the low-end market, even though HTC wants to gain traction in China, its phones are price uncompetitive," said KGI Securities analyst, Richard Ko.
"HTC's scale and margin are a lot lower compared to Samsung and Apple. It will see much pressure in the short to medium term," Ko said, adding he expected HTC to see limited growth in the second half.
HTC will be further pressured by a sales slowdown faced by the entire industry as the eurozone crisis continues to dampen global consumer sentiment.
"We may not see a traditional high season in the third quarter," said Peter Liao, an analyst at Nomura Securities. "Companies are not seeing strong pull-in and operators are feeling conservative towards giving subsidies."
HTC confirmed a news report on Friday that it has not renewed the contracts of some workers hired during the high season for its production line. The number affected is not more than 1,000, it said.
Numbers Tell The Story
HTC's unaudited April-June net profit was T$7.4 billion ($247.7 million), the company said, down from T$17.52 billion in the same period a year earlier, but up from T$4.47 billion in the January-March quarter. It did not elaborate.
Earnings had been expected to drop to T$8.25 billion, according to a Thomson Reuters I/B/E/S survey of 21 analysts.
Second-quarter revenue was T$91 billion, improving from T$67.79 billion in the previous quarter.
Last month, HTC cut its second-quarter revenue target by more than 13 percent to T$91 billion and cut its operating margin forecast by 2 percentage points to 9 percent, but kept its gross margin target at 27 percent.
HTC cited the poor economic situation in Europe that was hurting consumer demand, as well as delays to shipments of new phones to the United States due to a requirement for customs inspections after it lost a patent dispute with Apple.
In a separate statement on Friday, HTC said consolidated sales for June were T$30 billion, down 33.4 percent from the same month a year earlier and unchanged from May.
HTC shares closed down 5.15 percent at T$322 before the earnings were released, while the broader market fell 0.26 percent. The company has a market value of around $11.4 billion. ###
- Eric -