Bloomberg News

HTC Posts Record Profit, Beats Estimates, on Android Demand

July 06, 2011

(Updates with short interest in sixth paragraph.)

July 6 (Bloomberg) -- HTC Corp., Asia’s second-largest smartphone maker, posted record quarterly profit that beat analysts’ estimates, fueled by demand for handsets that run on Google Inc.’s Android operating system.

Second-quarter net income more than doubled to NT$17.5 billion ($608 million), the Taoyuan, Taiwan-based company said in a statement today. The average of 16 analyst estimates compiled by Bloomberg was for profit of NT$16.3 billion.

Revenue surpassed analyst estimates for a third straight quarter, helped by sales of the Desire HD, Sensation and Thunderbolt smartphones. The results may ease concern over intensifying competition, which drove HTC to its biggest monthly drop in almost two years and led brokers such as Macquarie Group Ltd. to cut their ratings on the stock.

“Intensified competition is always used as an excuse for bear analysts to sell HTC,” Lu Chialin, who rates the stock “buy” at Samsung Securities Co. in Hong Kong, wrote in a July 4 report. “HTC smartphones are constantly ranked among the top- five sellers in the U.S. and European markets, with market positions trending up.”

HTC climbed 3.3 percent to close at NT$1,095 in Taipei today before the earnings announcement, extending this year’s gain to 22 percent. In June, HTC shares declined 21 percent, the largest one-month decline since August 2009.

Short-interest ratio on the stock, which measures investor bets that the share price will decline, climbed to 2.9 percent at the close of trade yesterday, the highest since January.

Revenue

Second-quarter revenue more than doubled to NT$124.4 billion, HTC said today, reiterating figures reported earlier in the week. That’s more than the NT$118.9 billion average of 20 analysts’ estimates compiled by Bloomberg, and ahead of its own NT$120 billion forecast.

Operating income, which measures profit from its main business of making and selling phones, more than doubled to NT$19.2 billion, ahead of the NT$18.7 billion average of 11 estimates compiled by Bloomberg. Net income beat estimates for a sixth straight quarter, according to Bloomberg data.

Shipments met the company’s 11 million-unit target, Chief Financial Officer Winston Yung said in an interview July 4. Yung declined to provide third-quarter guidance ahead of an investors’ conference call on July 29.

Revenue is expected to climb to a record NT$134 billion, and net income to NT$18.5 billion this quarter, according to the average of 16 analyst estimates compiled by Bloomberg.

“We are very confident. I think we have launched a few products which will drive momentum all over the world,” Yung said July 4.

Twenty six of 35 analysts surveyed by Bloomberg advise investors to “buy” the stock, while eight say “hold” and one has a “sell” rating.

--Editors: Anand Krishnamoorthy, Young-Sam Cho

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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