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January 21, 2011, 7:01 AM EST
By Tim Culpan
(Updates with analyst’s comment in fourth paragraph.)
Jan. 21 (Bloomberg) -- HTC Corp., the world’s largest maker of handsets using Google Inc. and Microsoft Corp. operating systems, forecast revenue that beat analysts’ estimates as newer models boost phone prices.
First-quarter sales will be around NT$94 billion ($3.2 billion), Taoyuan, Taiwan-based HTC said today. The average of 11 analyst estimates compiled by Bloomberg was for revenue of NT$87 billion. Shipments may reach 8.5 million units for the period, compared with 9.1 million last quarter, it said.
Sales of more expensive models featuring high-definition video and fourth-generation wireless connectivity boosted HTC’s average selling price to the highest in almost two years. Growing demand prompted the handset maker to expand production capacity in Taiwan and China and consider outsourcing of manufacturing.
“The higher average price is evidence of their strong market position,” said Arthur Hsieh, who rates the company “buy” at UBS AG in Taipei and forecasts prices will rise further this quarter. “The fact they’re expanding production shows they’re preparing for another year of growth.”
The average price of an HTC handset climbed to $364 in the fourth quarter from $342 in the prior period, the highest since the first quarter of 2009. HTC got 51 percent of its sales, in Taiwan dollar terms, from the North American market last year, the company said in a statement.
Shares Fall
HTC fell 0.7 percent to NT$888 at the 1:30 p.m. close of trade in Taipei before the announcement, compared with a 0.8 percent drop in the benchmark Taiex index. The stock has lost 1.3 percent this year and the Taiex has fallen 0.2 percent.
HTC “suffered” from a shortage of materials last year because the company “wasn’t ready for such high growth,” Chief Executive Officer Peter Chou said in a conference call today. The company may use its cash to make investments in areas such as software, cloud-computing and content while it is less keen in acquiring hardware makers, he said.
The company, which currently manufactures handsets at plants in Taoyuan and Shanghai, will double capacity at the Chinese factory and add a new facility in Taiwan, Chou said. HTC will invest a further $32 million to expand the capacity in Shanghai, it said in a filing to the stock exchange. The company has invested a total of $188 million in China to date, according to the statement.
Outside Manufacturers
HTC hasn’t yet made a decision on whether to contract production to outside manufacturers, Chou said. It is also considering offering a tablet device and wants to “understand the market” before making a formal announcement, he said without elaborating.
HTC’s fourth-quarter net income more than doubled to NT$14.8 billion, exceeding analyst estimates, after demand for phones using Google’s Android system helped revenue climb more than twofold.
Some analysts have raised their first-quarter sales forecast in the past four weeks. The median of five estimates in the past 28 days compiled by Bloomberg is for revenue of NT$99.6 billion.
Sales of faster fourth-generation handsets in the U.S. will help ensure this quarter’s “low-season is not low,” Chief Financial Officer Winston Yung said on today’s conference call. First-quarter revenue has fallen from a quarter earlier in each of the past eight years after a sales peak in the Christmas shopping period. On Oct. 29, the company forecast shipments of 9 million units for the fourth quarter.
Gross margin, a measure of profitability that tracks sales minus the cost of goods sold, was 30 percent in the fourth quarter from 30.2 percent in the prior period. That figure will narrow to 29 percent to 30 percent this quarter, HTC said.
Android garnered 40.8 percent of the market for new smartphones bought in the U.S. during the six months to November, Nielsen Co. said in a Jan. 3 statement. That’s ahead of Apple Inc.’s iOS and Research in Motion Ltd.’s BlackBerry, according to the statement.
--Editor: Terje Langeland, Vipin V. Nair, Lena Lee.
To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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(Updates with analyst’s comment in fourth paragraph.)
Jan. 21 (Bloomberg) -- HTC Corp., the world’s largest maker of handsets using Google Inc. and Microsoft Corp. operating systems, forecast revenue that beat analysts’ estimates as newer models boost phone prices.
First-quarter sales will be around NT$94 billion ($3.2 billion), Taoyuan, Taiwan-based HTC said today. The average of 11 analyst estimates compiled by Bloomberg was for revenue of NT$87 billion. Shipments may reach 8.5 million units for the period, compared with 9.1 million last quarter, it said.
Sales of more expensive models featuring high-definition video and fourth-generation wireless connectivity boosted HTC’s average selling price to the highest in almost two years. Growing demand prompted the handset maker to expand production capacity in Taiwan and China and consider outsourcing of manufacturing.
“The higher average price is evidence of their strong market position,” said Arthur Hsieh, who rates the company “buy” at UBS AG in Taipei and forecasts prices will rise further this quarter. “The fact they’re expanding production shows they’re preparing for another year of growth.”
The average price of an HTC handset climbed to $364 in the fourth quarter from $342 in the prior period, the highest since the first quarter of 2009. HTC got 51 percent of its sales, in Taiwan dollar terms, from the North American market last year, the company said in a statement.
Shares Fall
HTC fell 0.7 percent to NT$888 at the 1:30 p.m. close of trade in Taipei before the announcement, compared with a 0.8 percent drop in the benchmark Taiex index. The stock has lost 1.3 percent this year and the Taiex has fallen 0.2 percent.
HTC “suffered” from a shortage of materials last year because the company “wasn’t ready for such high growth,” Chief Executive Officer Peter Chou said in a conference call today. The company may use its cash to make investments in areas such as software, cloud-computing and content while it is less keen in acquiring hardware makers, he said.
The company, which currently manufactures handsets at plants in Taoyuan and Shanghai, will double capacity at the Chinese factory and add a new facility in Taiwan, Chou said. HTC will invest a further $32 million to expand the capacity in Shanghai, it said in a filing to the stock exchange. The company has invested a total of $188 million in China to date, according to the statement.
Outside Manufacturers
HTC hasn’t yet made a decision on whether to contract production to outside manufacturers, Chou said. It is also considering offering a tablet device and wants to “understand the market” before making a formal announcement, he said without elaborating.
HTC’s fourth-quarter net income more than doubled to NT$14.8 billion, exceeding analyst estimates, after demand for phones using Google’s Android system helped revenue climb more than twofold.
Some analysts have raised their first-quarter sales forecast in the past four weeks. The median of five estimates in the past 28 days compiled by Bloomberg is for revenue of NT$99.6 billion.
Sales of faster fourth-generation handsets in the U.S. will help ensure this quarter’s “low-season is not low,” Chief Financial Officer Winston Yung said on today’s conference call. First-quarter revenue has fallen from a quarter earlier in each of the past eight years after a sales peak in the Christmas shopping period. On Oct. 29, the company forecast shipments of 9 million units for the fourth quarter.
Gross margin, a measure of profitability that tracks sales minus the cost of goods sold, was 30 percent in the fourth quarter from 30.2 percent in the prior period. That figure will narrow to 29 percent to 30 percent this quarter, HTC said.
Android garnered 40.8 percent of the market for new smartphones bought in the U.S. during the six months to November, Nielsen Co. said in a Jan. 3 statement. That’s ahead of Apple Inc.’s iOS and Research in Motion Ltd.’s BlackBerry, according to the statement.
--Editor: Terje Langeland, Vipin V. Nair, Lena Lee.
To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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