As Q4 2011 profits drop 26 percent, HTC blames fierce competition from Samsung, Apple

9to5 Staff | Feb 6 2012 - 10:07 am PT

In line with the previous unaudited earnings release, Taiwanese handset maker HTC just posted fourth-quarter results. The big news: A substantial 26 percent drop in profits on sales of NT$101.42 billion ($3.5 billion), which is a 2.5-percent decline versus the year-ago quarter. The stock also tanked 5 percent in Asian trading. Following in Samsung’s footsteps, HTC did not divulge unit sales. Speaking to analysts on an earnings call, HTC CFO Winston Yung blamed Samsung and Apple for the shrinking business:

Our weakness in first-quarter guidance comes from facing competition in the U.S. from iPhone and Samsung.

No matter how you spin it, the results mark HTC’s fall from grace. According to the latest NPD data, Android and iPhone together accounted for over 90 percent of smartphone sales in the United States. HTC devices are nowhere to be seen on the top five best-selling devices in the United States. The company previously said it would “rationalize” its 2012 smartphone portfolio to a handful of so-called “hero” devices with better 4G LTE features, such as the HTC Zeta that is believed to run a 2.5GHz Qualcomm Snapdragon quad-core chip. From the company’s annual 2012 statement:

To expand its brand preference and value, HTC will work at a global level to build emotional connections with consumers, putting more of its marketing resources behind fewer products and driving value in those product brands.

Looking forward, HTC will also focus on further driving down operating costs and “enhance the efficiency of marketing campaigns,” such as its Beats partnership with Dr. Dre. More tidbits are after the break.

More troubling, the company warned investors that revenues could drop 36 percent this quarter. It is also projecting first-quarter revenues between NT$65 billion and NT$70 billion versus the Wall Street consensus of approximately NT$85 billion. Poor financials continue a string of disappointing quarters for HTC that helped Google and U.S. carriers put Android on the smartphone map with the Oct. 22 launch of the T-Mobile G1 three years ago.

Here are some additional highlights:

4Q Highlights
• After-tax profit was NT$10.94 billion, EPS was NT$13.06
• Total revenues were NT$101.42 billion
• Gross profit margin and operating margin were 27.12-percent and 12.71-percent, respectively

2011 Highlights
• After-tax profit was NT$61.98 billion, up 56.77-percent year-on-year; EPS was NT$73.32
• Total revenue was NT$465.79 billion, up 67.09-percent year-on-year
• Gross profit margin and operating margin was 28.30-percent and 14.77-percent, respectively
• ROE was 70.37-percent compared to 56.33-percent in 2010