HTC One launch fails to prevent sharp decline in HTC's profits

Sales of the flagship HTC One phone appear to have helped the Taiwanese smartphone maker recover from a tough first quarter, but profits are still sharply down year on year.

Revenue for HTC's second financial quarter fell 23 percent year-on-year to NT$70.7bn ($2.3bn), according to its unaudited results. Operating income dropped to NT$1.05bn ($30m), a 87 percent fall compared to Q2 2012, and net income before tax fell to NT$1.52 ($50m), a year-on-year fall of 83 percent.

In contrast, Q2 operating income is well up on Q1 when operating income fell to NT$43m, the company's lowest quarterly profit since 2004.

Helping this quarterly recovery was the launch of the HTC One around the end of March this year, when it received largely positive reviews praising its build quality and fast quad core processor.

However, HTC's Q2 profits were below analyst forecasts and a recent research note from BNP Paribas predicted that third-quarter earnings are not expected to see a significant rise.

"HTC may have new products in Q3, but competition from Apple and other Chinese brands are fierce," said Taipei-based analyst Peter Liao, of Nomura Securities. "It'll be hard to keep the growth."

The smartphone maker has a number of products in the pipeline, with the mid market One Mini phone expected to launch in August ahead of handsets from competitors Samsung and Apple.

HTC was the world's 10th-biggest smartphone maker by shipments in the fourth quarter of 2012, according to analyst house Gartner.