HTC sees third-quarter revenue falling by up to 30 percent, missing forecasts

Taiwan’s HTC may be in a lot of trouble. The company has now said that it expects revenue to fall as much as 30 percent in the third quarter, when compared to the previous three months. This fall is far below analysts’ forecasts, which the company has rationalised by citing fierce competition in the mid to high-end smartphone markets.

A delayed launch for the much-hyped HTC One this year has highlighted the company’s struggles against dominant smartphone makers Samsung and Apple at a time when the market for high-end phones is said to be approaching saturation. The company also indicated a weak outlook for profit margins. The mass exodus that the company earlier saw may also have had a hand in the problems that HTC is currently facing.

While addressing the issue, the company, in a statement, said, “Our overall gross margin has been impacted by a relatively higher cost structure, lack of economy of scale and certain provisions needed to facilitate the clearance of aging products.”

HTC expects 30 percent drop in third quarter revenue (image credit: Nowhereelse.fr)

HTC said it expects revenue this quarter of T$50 billion - T$60 billion, below an average forecast of T$75.65 billion from 22 analysts polled by Reuters. It reported revenue of T$70.7 billion in the previous quarter and T$70.2 billion a year ago. HTC has often disappointed with its earnings over the last several quarters. The second-quarter net profit came in at just T$1.25 billion, far below forecasts and following a record low in the first three months of the year when a shortage of camera components set back the launch of the HTC One.

A planned marketing blitz , which includes enlisting actor Robert Downey Jr. for a reported $12 million to star in its ad campaigns, is expected to weigh on profit margins and analysts remain wary about the company’s longer-term prospects as Samsung and Apple have much deeper pockets to develop new products.

With inputs from Reuters