HTC Forecasts Biggest Ever Quarterly Loss on Slow Demand for High-End Android Devices

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By Agence France-Presse | Updated: 8 June 2015 14:40 IST
Shares in Taiwan's struggling smartphone maker HTC tumbled to their lowest level in more than a decade Monday after the company forecast its biggest-ever quarterly loss owing to weaker-than-expected demand from China.

HTC revised its second quarter guidance late on Friday, with sales predicted to slide to TWD 33 billion-TWD 36 billion ($1.06 billion-$1.16 billion), down sharply from the previous forecast range of TWD 46 billion- TWD51 billion.

The earlier second quarter forecast, made in April, would have marked an increase from first quarter sales of TWD 41.52 billion.

HTC also wrote off TWD 2.9 billion in idle assets and prepaid expenses, it announced on Friday.

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Overall, the company forecast a record quarterly loss of up to TWD 9.94 per share, compared with a minor profit when the previous guidance was released in April.

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"The change for revenue outlook is due to slower demand for high-end Android devices, and weaker than forecast sales in China," the company said in a statement on its website.

As a result, HTC shares on Monday fell on the Taiwan Stock Exchange by the daily limit of 10 percent to TWD 83.60, their lowest level since it listed in 2002.

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Analysts said the firm faces competition from low-cost Chinese rivals along with tech giants Apple and Samsung.

"As highlighted earlier, HTC's high-end flagships (M9, M9+) are visibly inferior to the competition, not just to Apple/Samsung, but also to Huawei and Xiaomi to some extent," Jeff Pu of Yuanta Securities Investment Consulting said in a note to clients.

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HTC reported net profit of TWD 360 million in the three months to March, lower than the TWD 470 million it recorded in the previous quarter but up from a loss of TWD 1.88 billion in the same period a year ago.

The company suffered its first ever net loss in the third quarter of 2013, as it slipped out of the world's top 10 mobile phone vendors.

Last year's launch of the popular M8 model created a fresh buzz around the brand, but analysts have warned that it still has a long way to go before regaining lost ground.

 

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Further reading: HTC, Mobiles, Smartphones
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