HTC suffers first profit drop in two years; 2011 profit still solid

The handset maker sees its profit decline by 26 percent year over year, but revenues on the year nearly double 2010 figures.

HTC

HTC trudged through a difficult fourth quarter, but all in all, 2011 was a solid year for the handset maker .

The company said today that during the fourth quarter of 2011, it posted a profit of NT$11 billion ($364 million), which, while strong, was down a thumping 26 percent compared to the same period last year when it generated NT$14.8 billion in net income. It was the company's first profit drop in two years.

HTC saw a similar story on the revenue side, as sales dropped from NT$104 billion in the fourth quarter of 2010 to NT$101.4 billion last quarter.

Although HTC didn't say why it had such a difficult quarter, it's no secret the company has been hit hard by competing devices from Apple, Samsung, and others that have attracted more customers worldwide. In an interview with Reuters in November, HTC's chief financial officer, Winston Yung , acknowledged the challenges his company faces, and said that it plans to deliver several "flagship" phones this year to combat competitors.

"We will focus on the product next year, better and more competitive," Yung said. "Other than new LTE phones for the U.S. market, we also have phones for the global market. We will launch some worldwide flagship products. We're confident in them."

As confident as it might be, HTC will face tough going this year. Samsung, which just declared that it turned in record financial performance in the fourth quarter , could sell as many as 374 million handsets this year. The final tally for 2011 could reach as high as 325 million units.

Meanwhile, Apple's iPhone continues to be a sales juggernaut, and speculation abounds that Apple will show off the iPhone 5 this year, which could only further hurt HTC's chances of gaining attention in stores.

But Yung doesn't seem inclined to worry. In November, he pointed out that HTC's competitive concerns aren't nearly as bad as some would have you think.

"I don't think it's so serious," Yung told Reuters. "We have six quarters of improvement, the most conservative guidance is 45 million units of shipments this year, a lot higher than 25 million last year."

He might have a point. HTC estimates that it generated NT$465.8 billion in revenue in 2011 and NT$62 billion in profit. In 2010, its revenue reached only NT$278.8 billion, while its profit hit NT$39.5 billion.

 

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