Low demand forces HTC to revise down its forecast

HTC, the world’s fourth-largest smartphone maker, has sharply revised down its guidance for the year, saying there will be no shipment growth this year even as it shifts focus to cheaper, mid-tiered products.

The Taiwan-based group – the world’s biggest maker of phones using Microsoft’s Windows Mobile platform and the only company to make phones using Google’s Android platform – blamed lower-than-expected demand from China and a delay in the release of products.

HTC, which had forecast double-digit unit growth, said on Friday revenue this year was expected to fall by up to 10 per cent, compared with a 29 per cent increase last year to T$152.56bn ($4.65bn).

The comments come as analysts predict profit margins at smartphone makers will come under increasing pressure as PC makers launch rival products.

Peter Chou, chief executive, blamed the lower forecast on delays in several key product launches, fewer contract manufacturing orders and the fact HTC “still needs more time to develop momentum” for its Google Android-powered smartphones.

In spite of earlier comments that this would be HTC’s “breakthrough year” in China, Mr Chou said the country’s third-generation market was not yet ripe for expansion: “It is a problem of overall readiness”, which should be resolved by the first half of next year.

HTC is waiting to release a version of the Magic, a smartphone running on Google’s Android platform and customised for China Mobile, China’s largest mobile operator. But China has been slower than expected to develop its long-awaited 3G network, meaning HTC has seen slower growth than expected in the country.

Cher Wang, chairman and major shareholder, told the Financial Times that HTC would keep its global brand name out of China for the time being in order not to damage Dopod, the premium brand it uses in China. She said an evaluation had found the Dopod brand was positioned as high-end and perceived as a genuinely Chinese brand.

Copyright The Financial Times Limited 2009

Post Author: gaurav

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