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Taiwan's HTC sees lower revenue, margins in fourth-quarter

HTC's latest smartphone, the Rezound is displayed during it's launch event in New York November 3, 2011. REUTERS/Brendan McDermid
HTC's latest smartphone, the Rezound is displayed during it's launch event in New York November 3, 2011. REUTERS/Brendan McDermid

By Clare Jim

TAIPEI (Reuters) - Taiwanese smartphone maker HTC Corp sees around a 14.5 percent fall in revenue in the fourth quarter from the previous three months, worse than analyst forecasts, while its margins will also decline, underlying the challenge it faces to rebuild in the face of stiff competition.

The company said in a statement on Friday that it expects its fourth-quarter revenue to be about T$60 billion ($2.05 billion), down from T$70.2 billion in the third quarter and below expectations of T$74.0 billion in a poll of 23 analysts by Reuters.

HTC also said it expects a gross margin and an operating margin of around 23 percent and 1 percent, respectively, falling from 25 percent and 7 percent in the previous quarter.

The former contract maker has been suffering a sharp decline in its fortunes since the second half of 2011 following a fairytale ride from contract manufacturer to strong global brand with phones based on Google Inc's Android software.

"I see worse shipments in Q4 because there's nothing exciting about HTC's new models; there won't be a high season for it," said Nomura Securities analyst Aaron Jeng, speaking before the announcement.

In the past few weeks, HTC has aggressively rolled out new models to regain market share. It released the "HTC J" targeted at the Japanese market last month and the "HTC One X+", an upgraded version of its high-end flagship model last Tuesday, both running Google's operating system.

Last month, it also introduced two colorful models running Microsoft's Windows Phone 8 software, the Windows Phone 8X and the Windows Phone 8S, among the first in the market.

HTC said earlier this month its third-quarter net profit fell 79 percent, missing forecasts, as its flagship phones failed to keep pace with Apple Inc's iPhone and Samsung Electronics Co Ltd's Galaxy range.

Samsung reported on Friday a fourth straight record quarterly profit of $7.4 billion, largely due to strong sales of its Galaxy smartphones.

Some second-tier smartphone vendors such as HTC and Nokia have been struggling with losses or razor-thin profits, though South Korea's LG Electronics Inc said on Wednesday it shipped a record number of smartphones in the third quarter and the division swung back to a profit.

Shares of HTC closed down 4.8 percent on Friday, while the broader market fell 1.8 percent. ($1 = 29.2500 Taiwan dollars)

(Reporting by Clare Jim; Editing by Jonathan Standing and Chris Gallagher)

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