HTC predicts poor first quarter

HTC’s warning of hard times ahead, and says it plans to focus on cheaper phones for developing markets.

It’s reported fourth quarter revenues of NT $60 billion ($2.03 billion) – lower than analysts expected. Gross margin was 23 percent, the same as last year. Net profit was NT $1 billion.

“We continue to focus on the most important element of our business: innovation,” says CEO Peter Chou.

“Our teams are delivering beautifully designed phones, containing the newest technological advancements. Outstanding products, paired with improvements in our marketing execution and overall readiness give us reason to feel optimistic about the progress we will make in 2013.”

However, the company’s predictions for the first quarter of 2013 are looking worse than expected. It’s forecasting revenue of between NT $50 and $60 billion. This compares poorly with the NT $65.8 billion it brought in during the first quarter last year – and with analysts’ estimates compiled by Bloomberg, which averaged NT $64.8 billion.

It’s predicting a gross profit margin of between 21 and 23 percent and an operating profit margin of one percent at most.

The company’s glory days seem to be over, at least for the time being. It’s had a tough year, finding it ever harder to compete with the likes of Apple and Samsung. It did, though, finally reach a licensing agreement with Apple during the year.

Now, it plans to focus more closely on developing markets such as China, where it plans new phones costing half the price of its current cheapest models. It is, though, also readying the launch of a new smartphone codenamed the M7 and due for launch this month.