HTC Kicks Off Marketing Campaign Following Q1 Sales Slide

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Taoyuan, Taiwan - Smartphone maker HTC kicked off a global marketing campaign following the launch of its new hero smartphones to kick start its steeply sliding sales and profits, the company announced in releasing audited first-quarter financial results.

The company previously released unaudited results that closely tracked the audited results, which show a 35.6 percent decline in first-quarter revenues and a 70 percent decline in net income after taxes.

The declines were caused primarily by a product transition in which new HTC One-series phones began to ship only at the end of the quarter, the company said.

Although it promises renewed growth because of the marketing campaign and the first-quarter product launch, HTC forecasts a second-quarter revenue drop of 16 percent to NT$105 billion ($2.56 billion), from NT$124.4 billion in the second quarter of 2011.

Referring to the steep first-quarter revenue decline, a company statement attributed the drop "primarily" to a "product transition cycle, with new product line sales beginning to ramp at the end of the first quarter." Gross margin "was impacted by the margins of older products, and lowered scale contributed to a lower operating margin during the quarter," the company added.

CEO Peter Chou called the two most recent quarters "a rebuilding period for HTC." Citing "very positive" market response to the new One series, he said, "we believe it will take HTC into its next phase of growth."

HTC kicked off a new global marketing campaign in April to support its new hero One series and take "a more holistic and efficient approach to global marketing to expand its brand equity and preference," the company also said. "Through this unified global campaign, the company will deliver a unified global message across its key channels, and from this HTC expects to see an increase in both brand value and sales momentum."

HTC's first-quarter revenues fell 35.6 percent to NT$65 billion ($2.2 billion), in line with the company's forecast decline of 32.8 percent to 37.6 percent.

The cellular handset and tablet maker also posted a 72 percent decline in operating income to NT$4.3 billion ($146 million) and a 70 percent decline in net income after taxes to NT$4.47 billion ($151.4 million).

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