HTC Corp. warns of net loss for second quarter
Taiwan- based smartphone vendor HTC Corp. has lowered its financial forecast for the second quarter of this year, warning that it could incur a net loss of almost NT$10 (US$0.32) per share for the quarter.
The smartphone vendor said that the revision partly resulted from lower-than-expected global demand for high-end Android devises, while the company’s sales in the China market failed to meet expectations.
In addition, after a comprehensive review of its assets based on current business conditions and future operational needs, HTC said that it booked a one-time impairment of NT$2.9 billion for idle assets and prepaid expenses.
As a result, HTC expects that it will post a net loss of NT$9.70NT$9.94 per share for the April to June period, a revision from an earlier forecast of only NT$0.06NT$0.34 losses per share.
It has also lowered its second quarter sales forecast to NT$33 billion- NT$ 36 billion from the previous estimate of NT$ 46 billion- NT$ 51 billion, and cut the second quarter gross margin forecast to 19-19.5 percent from 23-23.5 percent.
HTC said that the prepaid expenses included into the one-time loss for the second quarter referred to royalty payments for use of video and audio services based on an agreement signed by the company and a service provider.
The Taiwanese smartphone vendor said that since the second half of 2014, it outsourced production of part of its products, which has led to a lower capacity utilization rate and more idle assets, which resulted in the second quarter’s asset impairment loss.
Despite the move to cut its second quarter guidance, Cher Wang, chairwoman and CEO of HTC, said that her company remained determined to strengthen its competitiveness in the global world smartphone market, cut operating costs and raise efficiency.
Wang said that HTC will streamline its business operations, while devoting itself to developing products beyond smartphones for growth.
Shares of HTC have fallen to a new low since the company launched a listing on the Taiwan Stock Exchange in March 2002 amid concerns over its shipments at a time when the company faced fiercer-than-ever competition from its rivals not only in the high-end smartphone market but also in the budget model business.
On Friday, the stock closed at NT$92.80, far behind a historical high of NT$1,300 seen in late April 2011. So far this year, HTC shares have lost 34.6 percent.
In May, HTC posted NT$10.79 billion on consolidated sales, down 20 percent from a month earlier and down 48 percent from a year earlier. In the first five months of this year, its consolidated sales fell 13 percent yearon-year to NT$65.9 billion.