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HTC plans cheaper phones for China as revenue sags
February 05, 2013
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TAIPEI: Taiwanese smartphone maker HTC Corp will shift its focus more towards emerging markets and offer lower priced phones in China this year as it grapples with slumping revenue in the shadow of Apple’s iPhone and Samsung’s Galaxy series.

HTC gave a disappointing outlook on Monday for first-quarter revenue, saying it would be flat to 17 per cent lower than in the previous three months -worse than analysts had forecast -while margins are also seen holding steady or shrinking.

The former contract manufacturer’s fortunes have been declining sharply since the second half of 2011, as the growing global dominance of Apple Inc and Samsung Electronics Co Ltd in smartphones quickly deflated the success of its own brand’s rapid rise.

China, the world’s most populous nation and a rising consumer power, is a key battlefield for smartphone makers with its still low levels of penetration, but its price-conscious consumers pose a dilemma for premium brands keen to maintain their high-end image but eager to tap the mass market.

HTC Chief Financial Officer Chang Chia-Lin told a conference call for investors on Monday that his company, which has tended to rely on developed markets for most of its revenue and in China has focused on mid-to high-end models, was now ready to offer smartphones priced less than 1,999 yuan ($320) -currently its cheapest phone in China.

“We’re going to go down, but not below 1,000,” he said. “We see there’s still room to play” in 1,000 to 2,000 yuan phones.

Chang said HTC would also more closely target emerging markets overall this year. It expanded its reach to Myanmar last month by introducing local-font phones.

Apple Chief Executive Tim Cook has vowed to focus on Greater China as his company’s next big growth driver. Apple’s revenue from the region jumped to $7.3 billion in the December quarter, up 60 per cent from a year earlier.

HTC said it expects first-quarter revenue of T$50 billion to T$60 billion ($1.69-2.03 billion). That compares with T$60 billion in the fourth quarter and T$65.75 billion a year ago. Analysts had forecast HTC would earn revenue of T$62.77 billion for the quarter, according to the average projection of 18 analysts polled by Thomson Reuters I/B/E/S.

Reuters

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