HTC's fairytale 2010 is over, as the company reported a 25 percent fall in fourth-quarter profits. The smartphone maker is struggling to compete with its Android rivals and the Apple iPhone.
The Taiwanese phone giant's net profits dropped by 26 percent to $364 million from $490 million in the three months ending in December, from the same period a year earlier.
The company's revenue fell by $3.35 billion, a 2.5 percent decline on the previous year. Meanwhile, sales for December fell by over 20 percent from a year ago to $870 million.
But credit where credit is due. HTC saw this coming and warned for a downbeat period. Samsung appears to be unstoppable -- except for Apple's legal intervention -- in the Android market, and the disparity between the company's sales figures shows that.
The company said earlier in October that it expected lower revenues in the upcoming fourth-quarter due to "uncertainties from new models". HTC predicted its fourth-quarter revenue would suffer, even though its third-quarter posting was strong.
In December, things got worse for the smartphone giant as the company posted a 30 percent drop in sales from October, around 20 percent lower on the same period in 2010.
HTC sits behind Samsung as the global smartphone leader, with Apple second and Nokia third. Samsung said it expects a record fourth-quarter, with operating profits up by over 70 percent due to increased smartphone sales.
As the company continues to bring consumers top-of-the-range smartphones, competition within Android circles is taking its toll on everyone bar Samsung, which remains the top of its game.
What probably doesn't help HTC in the coming months is the U.S. import embargo on its smartphones. We can expect the U.S. market share to slide away further from HTC, and its profits drop significantly -- perhaps to breaking point.
What happens next? Unless HTC can pinpoint exactly where it is going wrong and strategize as to where it can take its dwindling smartphone business, analysts' predictions for the first-quarter net profit will ring true.
If the first-quarter continues to fall year-on-year, post the Christmas holiday snap, we know HTC is in a real quagmire.
Image credit: Reuters.
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