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HTC Declines Accelerate In Third Quarter

Taoyuan, Taiwan – HTC’s revenue and net profit fell for the fourth consecutive quarter on a year-over-year basis in the third quarter ending September.

It fell at a higher

percentage decline rate than in the previous three quarters, the company’s financial report shows.

The company nonetheless continued to post a net profit after taxes. Net profit came to NT$3.9 billion, down 79 percent, on a revenue decline of 48 percent to NT$70.2 billion.

For the fourth quarter, the company forecasts a 41 percent decline in year-over-year revenue to about $NT60 billion, in large part because the “vast majority” of new products shipping in the quarter won’t reach shelves until mid November, said chief financial officer Chialin Chang. The sales decline will put fourth-quarters sales below the first quarter’s NT$65 billion.

The company also forecast a continuing decline in operating margins in the fourth quarter to 1 percent from the third quarter’s 7 percent and the second quarter’s 9 percent.

The company recognizes it has “a lot of room to improve” in multiple operating areas, including “better management” of bringing products to market, said Chang.

HTC also “has some room to improve” in brand awareness and “more room to improve on the preference side,” he said. As a result, HTC will “continue brand building into 2013.”

“Quite a few lessons were learned” in the past nine months, including the need for a marketing message that recognizes that smartphones have quickly evolved into lifestyle products, he noted. So HTC’s marketing message must impart “a sense of coolness,” he said.

Chang said U.S. sales were “in line with expectations” and that, with new products shipping into the U.S, this quarter, “we’ll hopefully continue that momentum.”

China-market sales “continued the momentum,” and Europe and emerging markets have “room for improvement,” he said.

For the quarter, net profits fell at a double-digit percentage rate for the fourth consecutive quarter, and revenues fell at a double-digit rate for the third consecutive quarter.

Third-quarter net-profit declines of 79 percent followed a second-quarter decline of 57.8 percent, a first-quarter decline of 70 percent, and a fourth-quarter decline of 26 percent.

In revenues, the third-quarter sales decline of 48 percent followed a second-quarter decline of 26.8 percent, a first-quarter decline of 35 percent, and a fourth-quarter decline of 2.5 percent.