HTC Corp. share price down, Q4 revenue jumps due to increased demand for new devices

HTC Corp. reported a profitable third quarter on the back of its first quarterly revenue growth in more than three years as new mid-range handsets helped offset competition from other companies high-end models and cheap devices from Chinese rivals.

The Taiwan-based smartphone maker stated that fourth-quarter sales increased from NT$42.9 billion a year ago to NT$47.9 billion ($1.5 billion). The company had projected in October revenue in the range from NT$43 billion to NT$47 billion for the period, while analysts forecasts had called for NT$45 billion.

Operating profit amounted to NT$180 million, compared to analysts projections for a loss of around NT$30 million, helping the company not repeat its first annual loss in 2013.

HTCs net income over the period amounted to NT$470 million, topping analysts projections which ranged between NT$212 million and NT$330 million.

One of the analysts at Yuanta Securities – Mr. Jeff Pu commented for the Financial Times: “It’s still too early to call a recovery or turnround. At the mid-to-low end, HTC needs to reduce its prices significantly, to meet competitors offerings. But it’s difficult to stay profitable while doing that.”

The release of more mid-range handsets and focusing on cost-cutting has been beneficial for HTC, which managed to stay profitable over the last few quarters. The company, however, is still dealing with the challenge to manage its sliding sales.

HTC reported its first net annual loss in 2013, only two years after it became the worlds biggest smartphone producer by volume. To turn back profitable, the company curbed its dependence on high-end smartphones and started betting on the release of mid-to-low-end models aimed at emerging markets.

The companys flagship One (M8) failed to revive sales despite a slew of positive reviews as consumers preferred premium competitors such as Apples iPhone 6, while Lenovo and Xiaomi overtook the low-end niche and Samsung also shifted focus to eye the cheaper segments.

HTC Corp. fell by 1.40% on Tuesday in Taiwan to close at NT$141.00 per share, marking a one-year change of +5.62%. The company is valued at NT$119.40 billion. According to the Financial Times, the 19 analysts offering 12-month price targets for HTC Corp. have a median target of NT$101.00, with a high estimate of NT$135.00 and a low estimate of NT$90.00. The median estimate represents a -29.37% decrease from the previous close of NT$143.00.