HTC tried to soothe the market in the wake of last week's announcement that it is cutting its fourth-quarter revenue forecast by as much as 23 percent, arguing that it has a bumper crop of smartphones coming early next year to bring it back to growth.
HTC' stock, which has fallen 61 percent from the end of April, is being battered by concerns that the Taiwanese smartphone maker may have lost its edge and is being squeezed in an increasingly crowded market for devices running Google's (NASDAQ:GOOG) Android platform and Microsoft's (NASDAQ:MSFT) Windows Phone. The company has enjoyed quarter after quarter of revenue growth driven by the growing smartphone market.
Despite the concerns, HTC CFO Winston Yung said the company plans to continue to attack the U.S. market as well as develop global models. "I don't think it's so serious," Yung told Reuters Monday. "We have six quarters of improvement, the most conservative guidance is 45 million units of shipments this year, a lot higher than 25 million last year. We will focus on the product next year, better and more competitive. Other than new LTE phones for the U.S. market, we also have phones for the global market. We will launch some worldwide flagship products. We're confident in them."
HTC said it expects fourth quarter sales to be the same as last year, around $3.4 billion, down from last month's forecast of $4.1 billion $4.43 billion. The Taiwan-based company attributed the reduced forecast to the global economic crisis and increased competition from Apple (NASDAQ:AAPL) and Samsung. Although HTC was the largest smartphone maker in the U.S. market in the third quarter, according to research firm Canalys, it will face intense competition both in the U.S. and abroad from Apple's iPhone 4S and Samsung's Galaxy S II.
The cut in the revenue forecast caused at least six brokers, including Citigroup and Credit Suisse, to downgrade HTC's stock. The company's forecast change is "driven more by inferior product than by macro reasons," Kevin Chang and Jonathan Gu, analysts at Citigroup, wrote in a report last week. "We are most surprised by the lack of visibility and by how fast things deteriorate in the smartphone business."
- see this Reuters article
- see this Bloomberg article
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