HTC Said to Prepare Mini One Smartphone in Samsung Challenge

HTC Corp. (2498), the Taiwanese smartphone maker that posted record-low profit last quarter, is preparing to release a smaller version of its flagship One handset this summer, according to two people familiar with the matter.

The new model features a 4.3-inch screen, compared with 4.7 inches for the original version, and will go on sale by August, according to two people briefed on the plans who asked not to be identified because details aren’t public. The device will probably have a less-powerful Qualcomm Inc. (QCOM) processor and lower-resolution screen than the flagship, said one of the people.

HTC One, which was released in the U.S. in April, helped the Taoyuan, Taiwan-based company post sales in May that were its strongest monthly result in almost a year. The smaller version seeks to reclaim market share from Samsung Electronics Co. (005930), the world’s largest smartphone maker which last month unveiled the Galaxy S4 mini, a less-powerful version of the flagship handset released in April.

HTC declined to comment in an e-mailed response to Bloomberg News.

Made with a thin aluminum case, the original HTC One includes an UltraPixel camera, full high-definition screen and front-facing speakers. The device was described by New York Times reviewer David Pogue as “gorgeous” and by Bloomberg’s Rich Jaroslovsky as “state of the art.”

Photographer: Kiyoshi Ota/Bloomberg

The HTC Corp. HTC J One HTL22 smartphone is displayed during the unveiling event in Tokyo on May 20, 2013. Close

The HTC Corp. HTC J One HTL22 smartphone is displayed during the unveiling event in... Read More

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Photographer: Kiyoshi Ota/Bloomberg

The HTC Corp. HTC J One HTL22 smartphone is displayed during the unveiling event in Tokyo on May 20, 2013.

At least six brokers upgraded their recommendation on HTC since the One was unveiled in February.

Offering a smaller version may help the company keep its momentum and compete with Samsung’s slimmed-down device and ahead of a low-cost iPhone expected to be unveiled by Apple Inc. (AAPL) next quarter.

IPhone Competition

With a plastic case and less-expensive components, Pegatron Corp. will manufacture the new iPhone for a retail price of about $300 to $350, Fubon Financial Holding Co. analyst Arthur Liao said last month.

Product delays, marketing failures and management changes marked a 68 percent drop in HTC’s sales in six quarters, culminating in a 98 percent decline in first-quarter net income. The stock is down 9 percent in Taipei this year after annual declines of at least 39 percent in each of the past two years.

HTC’s global smartphone share dropped to 2.4 percent in the first quarter, from 6.4 percent in the fourth quarter of 2011, according data compiled by Bloomberg Industries. The company last week reported May sales of NT$29 billion, the highest since June 2012.

The company today said Lorain Wong would become global head of public relations with responsibility for media and analyst communications, according to an e-mailed statement.

Wong, who joins from Hong Kong-based submarine cable operator Pacnet Ltd., will report to Chief Marketing Officer Ben Ho, the company said.

HTC is rated sell by 15 of the 33 analysts tracked by Bloomberg, while nine have a buy recommendation.

To contact the reporter on this story: 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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