A delayed launch for the much-hyped HTC One this year has highlighted the company's struggles against dominant smartphone makers Samsung Electronics Co Ltd and Apple Inc at a time when the market for high-end phones is said to be approaching saturation.
The company also indicated a weak outlook for profit margins.
"Our overall gross margin has been impacted by a relatively higher cost structure, lack of economy of scale and certain provisions needed to facilitate the clearance of aging products," it said in a statement.
HTC said it expects revenue this quarter of T$50 billion - T$60 billion, below an average forecast of T$75.65 billion from 22 analysts polled by Thomson Reuters I/B/E/S. It reported revenue of T$70.7 billion in the previous quarter and T$70.2 billion a year ago.
HTC has often disappointed with its earnings over the last several quarters. Second-quarter net profit came in at just T$1.25 billion, far below forecasts and following a record low in the first three months of the year when a shortage of camera components set back the launch of the HTC One.
A planned marketing blitz, which includes enlisting actor Robert Downey Jr. for a reported $12 million to star in its ad campaigns, is expected to weigh on profit margins and analysts remain wary about the company's longer-term prospects as Samsung and Apple have much deeper pockets to develop new products.
© Thomson Reuters 2013