Bloomberg News

HTC Tells Analysts Seeing Sales Drop to Mind Information ‘Gap’

February 27, 2012

Peter Chou, chief executive officer of HTC Corp. Photographer: Chris Ratcliffe/Bloomberg

Peter Chou, chief executive officer of HTC Corp. Photographer: Chris Ratcliffe/Bloomberg

HTC Corp. (2498) Chief Executive Officer Peter Chou said analysts forecasting the biggest sales drop on record are lacking sufficient information about the product lineup of Asia’s second-largest smartphone maker.

“We respect peoples’ opinions, they have an opinion based on what they see, that’s fine, but they don’t know what we’re working on,” Chou said in an interview yesterday at the Mobile World Congress in Barcelona. “So there’s always a gap.”

HTC, once one of the most-fancied smartphone makers among analysts, has missed revenue estimates in three straight quarters because of competition from Apple Inc. (AAPL)’s iPhone and Samsung (005930) Electronic Co.’s Galaxy handsets. Chou, one of the smartphone maker’s founders, presented the multimedia-focused HTC One smartphone series to help claw back market share.

“They were in heaven because they felt they were the king of the hill - growing extremely fast, over 100 percent growth rates year on year and they thought it would last forever,” said IDC researcher Francisco Jeronimo. “But it won’t. The market changed very quickly.”

HTC in October forecast fourth-quarter sales below average analyst estimates after already missing in the prior period. The maker of Sensation and Desire handsets cut that outlook less than a month later before forecasting revenue this quarter that also fell below the average of estimates.

Shenzhen Duo

HTC has gained 27 percent this year, after dropping 42 percent in 2011. The Taipei stock exchange is closed today for holiday. Twelve of 35 analysts surveyed by Bloomberg recommend investors sell HTC, compared with eight who say “buy.”

Shenzhen-based rival ZTE Corp. (000063) is also trying to grab a larger share of the growing market for smartphones and tablet computers. The company, which unveiled eight handsets in Barcelona today, has a target to become the third-biggest maker of mobile devices this year after reaching the No. 4 spot in the most recent quarter, said He Shiyou, a ZTE board member.

Huawei Technologies Co., also based in Shenzhen, may triple the number of smartphones it delivers to 60 million this year as it takes aim at the iPhone and new handsets by Nokia Oyj (NOK1V), said Richard Yu, chairman of the company’s devices unit. Huawei yesterday unveiled the Ascend D quad handset, calling it “the world’s fastest smartphone.” The device will cost 15 percent to 20 percent less than “comparable phones.”

‘Hero’ Phones

HTC’s sales will drop 32 percent this quarter from a year earlier to NT$70.7 billion, according to the average of 21 analyst estimates compiled by Bloomberg. That’s the biggest year-on-year revenue drop since it listed on the Taiwan stock exchange ten years ago.

Chou said the company has signed up 144 wireless operators for the new device series, which features continuous photo shooting, quick shutter speeds and sound-file management software.

Chou last year opened up Studio, a new division in the company tasked with developing “hero” products that will represent the HTC brand and recapture the glory of top sellers such as HTC Desire which was released two years ago. HTC’s strategy will focus more on specific customer groups, especially ones desiring multi-media functions, he said.

“We believe different people want different things, one size doesn’t fit all,” Chou said. “That’s why we created a series of HTC One products, because they deliver awesome experiences, amazing camera and authentic sound.”

To contact the reporters on this story: Cornelius Rahn in Barcelona at crahn2@bloomberg.net; Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; Michael Tighe at mtighe4@bloomberg.net.


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