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HTC Quarterly Sales Beat Estimates, Says Growth to Continue

HTC Corp. (2498), Asia’s second-largest smartphone maker, posted sales that beat analysts’ estimates for a third quarter and said growth will continue as demand in the U.S. and Asia remain strong. Shares rose in Taipei trading.

Second-quarter revenue was NT$124.4 billion ($4.3 billion) and shipments met the company’s 11 million-unit target, Winston Yung, chief financial officer of the Taoyuan, Taiwan-based company, said by phone today. Sales more than doubled from a year earlier, and surpassed the NT$118.9 billion average of 20 analysts’ estimates compiled by Bloomberg.

Strong demand in the U.S. and Asia last quarter offset a slowdown in Europe, Yung said. HTC released its Sensation handset last month with a wide viewing angle and high-definition video camera as it seeks to lure consumers away from Apple Inc. (AAPL)’s iPhone and Samsung Electronics Co.’s Galaxy handsets.

“If you look at the overall number, it’s driven by the U.S., but if you look at the growth rate, the growth rate of Asia has been particularly high,” Yung said. “We are very confident. I think we have launched a few products which will drive momentum all over the world and have high expectations for Sensation.”

Second-quarter earnings will be announced July 6, Yung said. He declined to give sales or shipments forecasts.

‘Buy’ Ratings

HTC added 4.5 percent to NT$1,055 at the 1:30 p.m. close of trade in Taipei today, the highest level in a week. The stock has climbed 17 percent this year and is down from a record-high close of NT$1,300 on April 28.

The shares lost 21 percent in June, the largest monthly drop in almost two years, as analysts including Macquarie Group Ltd.’s Daniel Chang cut their recommendations, citing slowing sales growth amid strong competition from rivals.

Twenty-six of 36 analysts surveyed by Bloomberg advise investors to “buy” the stock, nine say “hold” and one has a “sell” rating.

“The market’s overall view of the second half had been toned down, and everyone expected HTC’s growth momentum to slow in the third quarter,” said Bonnie Chang, who recommends investors “buy” the stock at Yuanta Financial Holding Co. in Taipei.

HTC, the first company to produce a handset using Google Inc. (GOOG)’s Android platform, has posted year-on-year sales growth that surpassed 100 percent each quarter since the three months to Sept. 30, according to Bloomberg data.

Yung declined to comment on actual shipments or HTC’s profit margins. On April 29, the company forecast gross margin, a measure of profitability that tracks sales less the cost of goods sold, of 28.5 percent to 29.5 percent for the second quarter, compared with 29.3 percent in the preceding three-month period.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.

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