HTC has reported a sharp drop in quarterly net profit to $247.7 million and blames poor European sales and the fact that US sales were held up by customs inspections.

The company is betting on its new One series of phones to regain market share lost to Samsung and Apple. It has been cost cutting too. The company confirmed a news report on Friday that it has not renewed the contracts of some workers hired during the high season for its production line.

Analysts predict HTC will be upstaged by strong sales of the Galaxy S III and the latest iPhone, which is expected to launch in the fourth quarter. All this is happening as the whole industry faces a sales slowdown as the eurozone crisis continues to hurt consumers.
HTC's unaudited April-June net profit was $247.7 million, the company said.  This was down from the same period a year earlier but up from January-March. It did not elaborate.

Last month, HTC had cut its second-quarter revenue target by more than 13 percent and revised down its operating margin forecast by 2 percentage points to 9 percent, though it kept its gross margin target at 27 percent. HTC is valued at around $11.4 billion, had its shares closed down 5.15 percent after today's announcement.