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HTC Slides on Ugly 1Q Margins Guidance

Mon, 02/04/2013 - 11:01am
Andrew Berg

Shares of Taiwanese smartphone maker HTC were down almost 4 percent in early trading following a fourth-quarter earnings call Monday during which the company warned its margins would continue to fall in the coming year.

Net profit came in at $34.4 million, which actually beat analyst expectations of a $24 million. Still, that number was down 91 percent from the same quarter last year. 

Perhaps the biggest dissapointment for investors was declining margins. The company said it expects a first-quarter gross profit margin of around 21 percent to 23 percent. That compares to 23 percent in the fourth quarter and 25.03 percent in the first quarter last year. 

Operating margin in the first quarter of 2013 is expected to be 0.5 to 1 percent, compared to 1 percent in the fourth quarter of 2012. 

HTC has not done well recently in the United States, as competition from Apple and Samsung has all but pushed it out of the ring. The company is now hanging its hopes on the expected launch this month of new flagship phone, the M7.

HTC's share of the global smarpthone market has fallen off significantly. At the end of 2012, the company controlled just 4.6 percent of the total market, down from 10.3 percent at the end of 2011, according to recent number from IDC, which estimate that HTC shipped 32.6 million smartphones in 2012.

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