July 6 (Bloomberg) -- HTC Corp., Asia’s second-largest smartphone maker, posted its third consecutive drop in profit after cutting its revenue forecast amid competition from Apple Inc. and Samsung Electronics Co.
Second-quarter net income declined 58 percent from a year earlier to NT$7.4 billion ($247 million), the Taoyuan, Taiwan-based company said in a statement on its website today. The average of 13 analysts’ estimates compiled by Bloomberg after the company last month cut its guidance was for profit of NT$7.59 billion.
HTC slashed its sales forecast for the second time in three quarters after the maker of One, Sensation and Desire handsets suffered from steeper competition in Europe and shipments into the U.S. were delayed. New models from Samsung and Apple in the second half could hamper efforts by HTC to regain sales and market share.
“We expect HTC to continue to see severe ASP and margin pressure and a potential risk of running into operating losses in 2013,” Citigroup Inc. Taipei-based analysts Kevin Chang and Jonathan Gu wrote in a July 5 report, referring to average selling price. “HTC is likely to survive in the long term but things are likely to get much worse before they get better.”
Revenue for the quarter dropped 27 percent from a year earlier to NT$91 billion, compared with the NT$91.3 billion average of nine analysts’ estimates compiled by Bloomberg and HTC’s revised guidance of NT$91 billion.
HTC lost 5.2 percent to NT$322 at the close of trade today in Taipei before the earnings announcement, taking its slide this year to 35 percent after dropping 42 percent last year. The stock is rated sell by 21 of 37 analysts compiled by Bloomberg, with four recommending buy and 12 saying hold.
Earlier today, Samsung reported a better-than-estimated 79 percent increase in operating profit on higher sales of its Galaxy smartphone.
HTC replaced its Chief Financial Officer in April and last month announced the closure of offices in Brazil and North Carolina after posting a record profit drop in the first quarter.
Weaker-than-expected sales in Europe were the main reason for the forecast cut while a delay in the U.S., where customs officials checked for patent-infringements against Apple, also hurt revenue, new CFO Chang Chialin said in a conference call last month.
New models which are tailored for China have helped it continue boosting sales in the world’s largest mobile phone market. Its models climbed to 4.8 percent of the market in May, Barclays Plc wrote in a July 4 note citing data from SINO-MR. HTC had 2.7 percent of the market in the first quarter, according to the Beijing-based researcher.
“China is the fastest growing market and also the most important market for HTC given that it has lost market shares in the U.S. and Europe,” Barclays’ Taipei-based analyst Dale Gai wrote. “HTC could face more severe price competition because its current low-end models lag the functionality of those of its China competitors.”
HTC no longer provides shipment numbers, and will provide third-quarter guidance and discuss second-quarter results in a conference call to be held later this month.
To contact the reporter on this story: Tim Culpan in Taipei at email@example.com.
To contact the editor responsible for this story: Anand Krishnamoorthy at firstname.lastname@example.org.