HTC predicts drop in sales in Q3

The current year is not proving to be a good one (financially) for HTC. The Taiwanese mobile phone maker released its final results for the second quarter of this year, reporting revenue of a little over $3 billion (NT$91.04 billion) for the three-month period. Net income after tax was a mere $247 million (NT$7.40 billion).

For Q3, the company sees revenues falling to a range of NT$70 billion to NT$80 billion, below the previous Street consensus at NT$92 billion, according to Robert W. Baird analyst William Power. The company sees gross margin falling to 25%, from 27% in Q2, with operating margin of 7%, down from 9% in Q2. Power reports that he had projected a 27.7% gross margin for the quarter and 10.8% operating margins. HTC is facing stiff competition from Samsung and Apple, two of its biggest rivals.

Besides all this gloom and doom, there is a still a small ray of hope left for HTC in China. In an official statement, HTC says China is well positioned to become a key growth driver as its brand awareness grows and operator partnerships remain strong. It says Asia met expectation for growth since the HTC One line of smartphones launched in 2Q 2012, with sales across North and South Asia inline with expectations. The company says it intends to ramp up marketing and sales efforts in the crucial North America & EMEA markets. What remains to be seen is whether that will be enough to keep things running for the company.