HTC posts 26% drop in Q4 profits

PanARMENIAN.Net - Taiwan smartphone maker HTC Corp. reported Monday, Feb 6, a 26 percent drop in profits in the final quarter of last year as the weak global economy and intense competition hurt sales.

HTC said profits amounted to 10.9 billion New Taiwan dollars ($370 billion) - out of revenues of NT$101 billion - in the three months ending December. The company said several newly introduced 4G and other high-end smartphones disappointed as competition grew more intense from Apple Inc. and South Korea's Samsung Electronics Co.

HTC predicted its revenue will drop further to NTT$70 billion in the first quarter this year but will return to normal in the second quarter with the introduction of several new models.

HTC Chief Financial Officer Winston Yung denied the company's problems stemmed from a failure to keep differentiating its products from those of its rivals. "We have been in a product transition period" when consumers delayed purchases in anticipation of the new models, he told an investors' conference.

HTC added up to 1,000 engineers last year to its research and development team to build products that meet consumers' needs, he said.

HTC has grown on the strength of the design of its handsets, based on Google Inc.'s Android operating system. But it faces increasing competition from its top rival, South Korea's Samsung, while the global economic downturn has hit sales in its two main markets, the U.S. and Europe.

Among the newly unveiled HTC models is the 4.7-inch Titan II that runs on Microsoft's Windows Mango phone software.

"We expect our margins to return to the normal level with the launch of new products" that support both Android and Windows systems, Yung said.

Yung declined to comment on market rumors that Samsung might halt its supply of cutting-edge glass screens to HTC in order to undermine its top rival.

"We count on multiple sources for most component supplies, and we have contracts with suppliers to protect our rights," he said, The Associated Press reported.