HTC Forecasts Wider Loss Amid Struggle to Reverse Sales Drop

HTC Corp. (2498) forecast a wider-than-estimated loss and sales that will miss estimates as the Taiwanese smartphone maker struggles to turn around revenue amid a decline in market share.

First-quarter loss per share will be NT$2.10 to NT$2.60, the company said in a statement today, wider than the average NT$0.88 per share loss estimates of 18 analysts compiled by Bloomberg. A sales outlook of NT$34 billion ($1.1 billion) to NT$36 billion is less than the NT$39.3 billion average of 17 analyst estimates compiled by Bloomberg.

HTC, which last year signed Hollywood actor Robert Downey Jr. to promote its brand, plans to boost marketing to halt a slide in sales that spurred its first annual net loss on record. The latest version of its slim, metallic HTC One will be released next month with a larger screen and improved camera, Bloomberg News reported last month, citing a person with knowledge of the plans.

Gross profit margin, which measures the percentage of sales left after deducting production and materials costs, will be 21.5 percent to 22 percent this quarter, HTC said. That figure was 17.8 percent in the fourth quarter, with analysts estimating it would be 19.5 percent this period.

Photographer: Dario Pignatelli/Bloomberg

A customer browses HTC Corp. mobile devices at a retail outlet operated by KMD Co. in downtown Yangon. Close

A customer browses HTC Corp. mobile devices at a retail outlet operated by KMD Co. in downtown Yangon.

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Photographer: Dario Pignatelli/Bloomberg

A customer browses HTC Corp. mobile devices at a retail outlet operated by KMD Co. in downtown Yangon.

Lenovo, LG

The first-quarter sales forecast means Taoyuan, Taiwan-based HTC expects to post its lowest quarterly sales since 2009.

HTC had two consecutive quarters of operating loss in the second half of 2013, the first on record, dragging down full-year earnings to a net loss. It posted a fourth-quarter net income after the sale of its remaining stake in Beats Electronics LLC boosted non-operating income.

HTC seeks to revive sales, which fell for two years straight, as rivals LG Electronics Inc. (066570) and Lenovo Group Ltd. (992) gained market share.

“We took our eyes somewhat off the ball” in terms of product lineup, Chief Financial Officer and head of global sales Chang Chialin said in an interview in New York last week. He declined to say whether the company will boost its marketing budget this year after spending fell in the past two years.

“It’s really not only the budget increase, it’s the way you spend the money. Is it smart?” Chairman Cher Wang said in the same interview. “There’s a lot of ways to reach the audience right now.”

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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