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HTC Predicts Negative Operating Margins for Q3

Jul 30 2013, 6:48am CDT | by , in News | Misc

HTC Predicts Negative Operating Margins for Q3
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HTC earned NT$1.25 billion profit in Q2, 2013 with NT$70.7 billion revenue and 1.5% operating margin. Taiwanese smartphone maker predicts its first ever negative margins (0% to -8%) and huge 30% decrease in revenue for next quarter.

HTC posted its second quarter earnings results today with a forecast of its first ever operating loss in next quarter. HTC profits goes down every year but the Taiwanese smartphone firm predicted to see its first negative operating profits next quarter since its launch (2002). HTC misses analyst's forecasts for Q2 too. It earns very low net profit amount of NT$1.25 billion in Q2 with an EPS of NT$1.50 billion. This record low profit might be because of the delay of company's much-hyped smartphone, HTC One.

HTC predicts to gain NT$50bn to NT$60bn revenues in Q3 which are 30 percent less than NT$70.7bn Q2 revenue. Q3, 2013 gross profit margin is expected up to 21% which is 2.2% less than Q2. Gross profit margin for Q2 is 23.2 %. HTC's operating margin for Q2 is 1.5%, though less but not negative. As the company predicts a negative operating margin in Q3. It is expected to be in the range of 0% to -8%.

HTC CEO Peter Chou said, "My leadership team continues to focus on execution. We are seeing expected results as we fill the channels and meet demand for the new HTC One. As we broaden our focus to include a new member of the HTC One family, the recently announced One mini, we are looking forward to delivering great products and results in 2H."

HTC has also planned a marketing blitz of $12 million to improve its sales. According to Reuters, Robert Downey Jr. will be the new face of company's ad campaigns that will help its efforts to survive against big names like Apple and Samsung that are currently dominating the smartphone market.

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