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HTC Profits Dive, Weak Q1 Ahead

Mon, 02/06/2012 - 7:22am
Maisie Ramsay

HTC's warnings of a 26 percent drop in profits came true today when the Taiwan smartphone manufacturer posted fourth quarter results in line with its grim forecast.

After-tax profits plummeted to 10.9 billion New Taiwan dollars, or $370 million, on sales of $3.4 billion, during the last three months of 2011.

HTC said the decline was "mainly a result of product transition."

The company was a rising star in the smartphone world, rocketing to success on the strength of its Android-based smartphones and tablets. But competition from Apple's iPhone and iPad products and Samsung's Android devices appears to have sapped HTC's mojo.

After posting several successive quarters of strong growth, HTC warned investors in October that trouble lay ahead for the end of the year.

Though the company said in its earnings announcement that its "margins are a temporary phenomenon and will normalize when product cycle transition is over," it also warned that weakness would continue in into the first quarter.

Sales will come in between $2.2 billion and $2.36 billion for the first quarter, with gross margin around 25 percent.

HTC is working to make its devices more competitive as it battles to get consumers to pick its smartphones over those manufactured by its rivals. The Associated Press reports that HTC hired 1,000 engineers last year to beef up its research and development teams.

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