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Contrasting fortunes for HTC and Samsung in Q1

HTC in "transitional quarter" after losing share to Apple and Samsung, the Korean giant set for record profits


Published: 10 April, 2012

READ MORE: Financial | Asia | Handset | Android

Contrasting fortunes are in store for HTC and Samsung as they report first quarter results, as the smartphone market continues to be concentrated in the hands of the Korean giant and Apple - at the expense of other Android majors.

HTC set the tone for the imminent reporting season by warning that its Q112 results would be very weak, with profits collapsing to about $151m, 70% down on the year-ago period. Revenues, in the as-yet unaudited figures, will be seen falling by almost 35% year-on-year to $2.3bn.

The vendor made a strong impression at February's Mobile World Congress with the launch of its quad-core HTC One X and other high impact models in its range, but these products are not yet commercial and so able to influence market share. In Q1, this continued to fall against those of Apple and Samsung, which in the last quarter of 2011 had a combined holding of 46.3% of smartphones, while HTC had 6.5%. A recent study by comScore showed HTC clawing back some share in the US in early 2012, increasing this fractionally between December and February to about 6.3%, but well behind Samsung's 25.6% and Apple's 13.5%.

The Taiwanese vendor will hope its new offerings will accelerate the slight trend, with T-Mobile USA launching the One S this spring - but will face competition from the upcoming launch of Samsung's Galaxy S III, and later in the year from an LTE iPhone.

CFO Winston Yung admitted HTC had "dropped the ball" on new products during the fourth quarter, increasing inventory and turning Q112 into a "transitional" quarter. He said: "The form factor could be better and the product design could be better. So we've learned lessons from the fourth quarter products."

Meanwhile, Samsung will rub salt in the wound by reporting record first quarter results. The company has revealed preliminary figures ahead of analyst forecasts, despite pressure on its chip business. Gains in handsets and TVs drove operating profit to an unaudited KRW5.8 trillion ($5.1bn), up 96% from KRW2.95 trillion a year earlier. First quarter sales jumped 22% year-on-year to KRW45 trillion.

In the mobile unit, profits are estimated to have more than doubled on the back of launches like the Galaxy Note, and the continuing success of the Galaxy S II, which has sold 20m units in the 10 months since launch. Samsung also launched 3D and web TVs. The firm did not reveal divisional breakdown or net profit figures at this stage.

"Sales of new models of smartphones, such as the Note, were better than expected," James Song of Daewoo Securities told Bloomberg. "They have a good line-up of new products, so they will be able to keep the momentum alive for two or three quarters, at least."

Analysts calculate that Samsung sold 44m smartphones in the quarter, more than three times the year-ago number, which would beat Apple's shipments "by a significant margin", according to a research note from CLSA Asia-Pacific Markets. The Korean giant aims to double sales of smartphones and tablets this year, and it expects to sell about 380m handsets (including featurephones) in 2012, after shipping a record 300m units last year.

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