HTC Corp (2498) Forecast Misses Estimates Due To Weak Demand

Posted Nov 5, 2013

HTC Corp (TPE:2498), the Taiwan based smartphone manufacturing company, reported their first loss on record last month.  HTC has forecasted sales as missing analyst estimates for a second straight quarter due to weak demand.  HTC”s fourth quarter revenues will be at between NT$40 billion ($1.4 billion) and NT$45 billion ($1.5 billion).  This is behind the NT$52.2 billion average from 21 analysts compiled by Bloomberg.


HTC cut expenses, introduced new handsets, and launched a new ad campaign that features Robert Downey Jr.  All of these strategies failed to prevent their first loss since listing 11 years ago.

HTC Corp (TPE:2498) gross margin for Q4 will be between 19%-21% compared to estimates of 20.7%.  HTC Corp (TPE:2498) is looking to cut operating costs to NT$10 billion or below that, according to HTC chief financial officer Chang Chialin in an investor call.  The operating expenses fell to NT$13.1 billion in the third quarter from NT$15.3 billion.

This forecast implies and operating loss of as high as NT$2.4 billion, according to Bloomberg.  The average of 15 analyst estimates compiled by Bloomberg is at an operating loss of NT$991 million.

The net income will be increased by the completion of HTC’s sale of their stake in Beats Electronics LLC.  Earnings per share is expected to be at between NT$0.1 and NT$1.7 compared to a loss per share of NT$3.58 last quarter and average analyst estimates being at NT$0.04.

HTC Corp (TPE:2498) will be selling their reminding 24.84% stake in Beats for a pretax profit of NT$2.52 billion.  HTC made the investment in Beats two years ago.

On October 4th, HTC Corp (TPE:2498) posted a NT$2.97 billion net loss for the quarter ended September, which is wider than the NT$1.71 billion average of 16 analyst estimates.  The sales of NT$47.05 billion is behind the NT$54 billion estimate average.

[Source: Bloomberg]