HTC cuts Q2 revenue forecast on weaker U.S., European sales

HTC lowered its second-quarter revenue forecast by 13.3 percent, citing weaker sales in Europe and delays in getting some its products through U.S. customs. This revised forecast is the latest blow to the Taiwanese smartphone maker as it seeks to regain momentum in the market.

In a brief statement on its website, HTC said that it now expects revenue for the second quarter to be around $3.04 billion, down from a previous forecast of $3.51 billion. The company said the lowered forecast includes an $86.9 million charge it is taking to clear unsold inventory from last year.

"A bigger softness is from Europe than the U.S.," CFO Chia-Lin Chang said on a conference call with analysts, according to Reuters.

Shipments of two of HTC's flagship smartphones, the Evo 4G LTE for Sprint Nextel (NYSE:S) and One X for AT&T Mobility (NYSE:T), were held up last month at U.S. customs to ensure they complied with a ruling from the U.S. International Trade Commission. The ITC ruled that HTC had violated an Apple (NASDAQ:AAPL) patent that covers the ability to convert clicking on phone numbers and email addresses into actionable links on smartphones. HTC said late in May that its shipments were proceeding as normal, but the delay clearly cut into sales for the company.

Despite the weakness in the United States and Europe, HTC said it expects sales from China to help its revenue numbers. "But sales in China are better than we thought; we expect China will contribute a representative percentage to the revenue this quarter," Chang said.

HTC is banking on its One series as well as flagship devices like the Evo 4G LTE at Sprint and Droid Incredible 4G LTE Verizon Wireless (NYSE:VZ) to help its buoy its fortunes in the U.S. market. In the first quarter, HTC reported an overall 70 percent drop in 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.

HTC will face tough competition in the second and third quarters from Samsung Electronics, which is pushing its flagship Galaxy S III. Five U.S. carriers hav already agreed to sell the product.

Analysts said HTC's reduced forecast could mean more uncertainty for both the company and the wider industry for the rest of the year. "If the reason is more because of the macro concern, then it's not in the control of the company, no matter how good its products are," Bonnie Chang, an analyst from Yuanta Securities, told Reuters. "It can even affect the business of Apple."

For more:
- see this Reuters article
- see this Dow Jones Newswires article

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