Taiwanese smartphone maker HTC Corp will shift its focus
more towards emerging markets and offer lower priced phones in China
this year as it grapples with slumping revenue in the shadow of Apple's
iPhone and Samsung's Galaxy series.
HTC gave a disappointing outlook
on Monday for first-quarter revenue, saying it would be flat to 17
percent lower than in the previous three months - worse than analysts
had forecast - while margins are also seen holding steady or shrinking.
former contract manufacturer's fortunes have been declining sharply
since the second half of 2011, as the growing global dominance of Apple
Inc and Samsung Electronics Co Ltd in smartphones quickly deflated the success of its own brand's rapid rise.
the world's most populous nation and a rising consumer power, is a key
battlefield for smartphone makers with its still low levels of
penetration, but its price-conscious consumers pose a dilemma for
premium brands keen to maintain their high-end image but eager to tap
the mass market.
HTC Chief Financial Officer Chang Chia-Lin told a
conference call for investors on Monday that his company, which has
tended to rely on developed markets for most of its revenue and in China
has focused on mid- to high-end models, was now ready to offer
smartphones priced less than 1,999 yuan - currently its cheapest phone
"We're going to go down, but not below 1,000," he said. "We see there's still room to play" in 1,000 to 2,000 yuan phones.
said HTC would also more closely target emerging markets overall this
year. It expanded its reach to Myanmar last month by introducing
Apple Chief Executive Tim Cook has vowed to
focus on Greater China as his company's next big growth driver. Apple's
revenue from the region jumped to $7.3 billion in the December quarter,
up 60 percent from a year earlier.
Power of the brand
said it expects first-quarter revenue of T$50 billion to T$60 billion.
That compares with T$60 billion in the fourth quarter and T$65.75
billion a year ago.
Analysts had forecast HTC would earn revenue
of T$62.77 billion for the quarter, according to the average projection
of 18 analysts polled by Thomson Reuters I/B/E/S.
HTC also said it
expects a first-quarter gross margin of about 21 to 23 percent, flat to
lower from 23 percent in the prior quarter, and an operating margin of
0.5 to 1.0 percent, also flat to lower from 1 percent.
weaker-than-expected first-quarter revenue outlook follows a 91 percent
year-on-year slide in the Taiwanese company's net profit in the fourth
quarter that fell short of analyst forecasts.
Analysts doubt that 2013 will be a turnaround year for HTC as the power of its brand lags far behind Apple and Samsung.
some have said that the next version of its flagship smartphone,
code-named "M7" and which they expect to be launched in the middle of
this month in New York and London, could give the company a first-mover
advantage of a few months on features such as higher-resolution cameras.
declined to give details or a launch date for the new model but said he
expected sequential revenue growth quarter to quarter in 2013 as the
company rolls out new products.
Samsung Electronics, the world's
top smartphone maker, said last month that it expected the global
smartphone market to shrink in the first quarter from the seasonally
strong fourth quarter, while the overall handset market would see growth
at a mid single-digit percentage rate this year from 2012, with the
smartphone segment set to slow.
Strong smartphone sales powered an
89 percent increase in operating profit at the Korean company in the
October-December quarter to a record $8.3 billion.
California-based Apple, which faces intense competition from Samsung,
sparked a slide in its share price late last month when it forecast
lower revenue of $41 billion to $43 billion in its current fiscal
quarter, down from $54.5 billion in the previous quarter and below the
average Wall Street forecast of more than $45 billion.
shares of HTC fell 1.6 percent, versus a 0.9 percent rise in broader
market. HTC's shares have fallen more than 40 percent
since the start of last year, compared with a 12 percent rise in the
Taiwan stock benchmark.
© Thomson Reuters 2013