HTC records first profit drop in 2 years

TAIPEI: HTC, Asia's second-largest smartphone maker, posted its first quarterly profit decline in two years as competing models from Apple and Samsung Electronics damped demand for its handsets. Fourth-quarter net income dropped 26% to NT$11 billion ($364 million) from NT$14.8 billion a year earlier, the Taoyuan, Taiwan-based company said in a statement on Friday. The average of 11 analyst estimates compiled by Bloomberg in the past four weeks was for profit of NT$11.6 billion.

Analysts predict sales and shipments will fall further this quarter after the company cut its outlook for revenue in the last three months of 2011. Sales of HTC handsets, including the Sensation, Wildfire and Rhyme, slowed in the fourth quarter.

"Competition from Apple and Samsung has been their key challenge," Dale Gai, a Hong Kong-based analyst at Barclays. "HTC has not had much focus in the mid to low-end, and they've underestimated the speed of growth in this segment."

Fourth-quarter revenue fell 2.5% from a year earlier to NT$101.4 billion, compared with the NT$103.3 billion average of 11 analyst estimates. Shipments dropped to 10 million units and will decline to 8.5 million this quarter.