HTC's Q1 2012 reports 70 percent profit drop

HTC's earnings outlook appears weak as it reports a 70 percent fall in net profit during its 2012 first quarter, below forecasts but recoverable in the second quarter.
Written by Zack Whittaker, Contributor

Taiwanese smartphone marker HTC reported a critical 70 percent profit tumble, below forecast expectations, but could recoup its losses with upcoming smartphone models set to launch this quarter.

Its revenue has fallen by shy of 35 percent compared to the same period a year ago, with the company still reeling from a painful January where revenues fell by almost 50 percent, dropping to $565 million compared to around $1.2 billion in January 2011.

While March rose, Q2 could show stronger profits if the trends continue, analysts said. The upcoming One series of smartphones, set to begin pre-ordering in May, could propel the company back from a dark hour into a more positive light.

The company blamed a time of "product transition" which may see HTC's revenues and profits stabilise. HTC's Q4 2011 raised $3.43 in revenue, while its outlook projects total revenues in this quarter just passed between $2.2 billion and $2.37 billion.

HTC is the fifth largest smartphone maker in the world, with its phones running Android and Microsoft's ailing mobile operating system Windows Phone.

While HTC has been faring better than Research in Motion, the BlackBerry maker, by replacing it in fifth place in comScore's mobile market share metrics, the company's investors are showing concern that it is not holding its head above the water in market competition.

IDC estimates that HTC had 8.9 percent of the global smartphone market share in 2011, well behind Apple at 19 percent and Samsung at 19.1 percent. But competing with the two smartphone supergiants is difficult, IDC contradicts comScore's figure showing that even the BlackBerry maker remains ahead of HTC's share at 10.4 percent.

The company has also embraced 4G LTE technology, way ahead of its rivals like Apple, which is expected to bring out a 4G-compatible smartphone in Q2 or Q3 for an expected fall release, but behind Samsung which remains the leader in the field.

Samsung's estimated profits rest at $5.15 billion, with its sales reaching around $40 billion in Q1 2011.

Image credit: CNET/CBS Interactive.


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