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Thursday, 24 November 2011 10:23

HTC cuts revenue forecast

Written by Nick Farell



No growth, shares tumble


Taiwan mobile phone maker HTC has cut its revenue forecast for the fourth quarter saying that there will be no growth at all. Last year it was reporting growth of 20 percent to 30 percent year on year growth previously. The prophecy of doom surprised the market and and HTC shares fell 7 percent.

HTC is the world's number four smartphone maker. However it has been facing a slowdown in shipment growth in the second half of this year after growth more than doubled in the first half. Competition from Apple and Samsung has hurt it, but it looks like it has been badly hit by the weakening global economy.

Reuters quoted Sanford Bernstein senior analyst Pierre Ferragu as saying that analysts had no clue that things had got so bad at HTC. In fact distribution channels, especially in Europe, were a lot more optimistic. HTC did not give a specific revenue forecast for the fourth quarter in a stock exchange statement on Wednesday. Revenue in the fourth quarter of 2010 was $3.42 billion.

It is not as if no one was warned. In October HTC had warned of slowing fourth quarter revenue. It said in the filing that it had confidence in its products and business and forecast a pick up in revenue in the first half of 2012. If the revenue prediction is right, it means that HTC is predicting a 20-25 percent quarterly decline in the fourth quarter.  To do that it would have to flog two-million less smartphones than it predicted.

It has been a bad week for HTC. The outfit said it will re-evaluate the acquisition of graphics technology firm S3 Graphics after a US commission ruled Apple did not violate patents owned by S3 Graphics. HTC thought that buying S3 would have helped it see of Apple's patent trollage.

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