HTC Falls to 3-Week Low After Profit Declines

HTC Corp. (2498), Asia’s second-largest smartphone maker, fell to its lowest in three weeks in Taipei trading after posting its first quarterly profit decline in two years and the slimmest operating margin since at least 2008.

The shares dropped as much as 4.2 percent to NT$462, the lowest intraday level since Dec. 20, and traded down 3.8 percent at NT$463.50 as of 11:58 a.m in Taipei. The stock was the second-biggest contributor to the benchmark Taiex (TWSE) index’s 0.6 percent decline.

HTC’s fourth-quarter net income dropped 26 percent to NT$11 billion ($364 million), missing the average of 11 analyst estimates for profit of NT$11.6 billion. Shipments and sales may fall further this quarter as competition from Apple Inc. and Samsung Electronics Co. dent demand for its handsets.

“We don’t think HTC’s monthly sales and shipments will pick up until after it strengthens its product portfolio at the Mobile World Congress in February,” Richard Ko, who rates the stock “neutral” at KGI Securities Co. in Taipei, wrote in a Jan. 6 report after the earnings announcement. “We suggest investors revisit the stock after the firm launches new products at the MWC.”

Operating margin (2498), which tracks the percentage of sales less operating costs, dropped to 12.8 percent, according to Bloomberg calculations.

Citigroup Inc. cut its 2012 and 2013 earnings estimates for HTC by 19 percent each, citing expectations of market share losses to Apple and Samsung.

To contact the reporters on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net.

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