After tough Q1, HTC CEO says U.S. recovery will be 'difficult'

As expected, HTC reported weak first-quarter results, but predicted that its second quarter would be better than the first as it begins selling its new One series of smartphones. Still, HTC CEO Peter Chou tried to temper growth expectations, particularly in the U.S. market.

HTC One X Android smarpthone for AT&T

One X

During a conference call with investors to discuss its first-quarter results, Chou said HTC will not be able to return to the days a few years ago when the U.S. market made up more than 50 percent of its revenues, according to Reuters. He also said the United States would not be its largest market this year.

AT&T Mobility (NYSE:T) will sell an LTE-capable One X for $199.99 with a two-year contract startign May 6, while T-Mobile USA said it will sell the One S $199.99 with a two-year contract starting April 25. Additionally, U.S. Cellular, MetroPCS (NYSE:PCS) and Sprint Nextel's (NYSE:S) Virgin Mobile will all launch HTC's One V at some point.

"It's difficult to recover our market share in the U.S. We will have more balanced growth in different markets this year," he said, according to the Wall Street Journal, but added the Taiwanese smartphone maker still sees growth in Asia and Europe. "We are confident in the company's future. We have seen encouraging growth momentum in the second quarter."

HTC catapulted into the smartphone stratosphere by being the first company to embrace Google's (NASDAQ:GOOG) Android, but has seen this growth slow amid rising sales by Samsung. The company has since refocused its strategy around the One line of phones, a conscious effort to slim down its portfolio and concentrate its marketing. However, HTC has also suffered from Apple's (NASDAQ:AAPL) iPhone. "A major challenge we faced last year was the big drop in sales in the U.S. because of competition from the iPhone 4S," Chou said, without elaborating.

In the first quarter, HTC reported a 70 percent drop in first-quarter profit, down to $151.5 million, its lowest quarterly net profit since 2006. Revenue also dipped 35 percent in the quarter, down to $2.29 billion. Looking ahead though, the company was more upbeat, and said it expects revenue for the second quarter to be 55 percent higher than the first, at around $3.56 billion. Still, that figure would be 15 percent below the revenue HTC had in the second quarter of 2011.

Interestingly, HTC's One S will be powered by a new chipset from Qualcomm (NASDAQ:QCOM), according to ABI Research analyst Edward Rerisi. "The One X has components we have seen in prior phones but the One S sports the very first 28nm S4 chipset from Qualcomm, the MSM8260A," he wrote. "The MSM8260A comes in 33% smaller than its older sibling, the MSM8260, but it contains more power in that smaller size. The One X will not be forgotten though. ABI Research expects that when it hits the USA shortly, it will also contain a 28nm chip from Qualcomm. This chip has the same application processor capability but adds LTE compatibility to the modem."

For more:
- see this HTC release (PDF)
- see this HTC presenation (PDF)
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Bloomberg article
- see this The Verge article
- see this ABI Research post

Related Articles:
HTC: We'll recover in 2012
HTC launches One smartphone lineup, One X for AT&T and One S for T-Mobile
HTC posts weak Q4 results, warns sales could fall 36% in Q1
Analysis: Why Apple and Samsung are killing it in the smartphone market
HTC's Q4 profit drops nearly 26% as Samsung's profit soars

Suggested Articles

Charter is also considering the use of its distributed wireline assets to help with small cell placements.

Loon and Internet Para Todos Perú reached a pact to use high-altitude balloons to expand mobile internet access to parts of the Peruvian Amazonia.

The millimeter wave market feels the same as a high-speed motorcycle jump, and operators are racing up the ramp.