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Foreign brokerage firms cautious about outlook for phone maker HTC

TAIPEI--Foreign brokerage firms have expressed concern about the business outlook for Taiwanese smartphone maker HTC Corp. in the coming quarters, in light of stiff competition from Apple Inc. and Chinese low-cost handset makers.

The high-end smartphone players, such as Samsung and HTC, reported disappointing shipment numbers as customers seem to have delayed their purchases in anticipation of the new iPhone launch in the second half of 2014, a U.S.-based brokerage firm said in an Aug. 1 report.

The U.S. brokerage also said HTC is entering too late the mid- and low-end markets because Chinese smartphone brands such as Xiaomi and Huawei, as well as some PC brands such as Asustek and Lenovo, are raising their average selling prices with more aggressive marketing strategies than HTC in the mid-tier market.

Another European brokerage firm said HTC will find it hard to increase its operating profit due to the lack of scale and deteriorating shipment outlook. As the rumored iPhone 6 is due to be launched soon, it may be difficult for HTC to regain momentum in the near term, the brokerage firm added.

The European brokerage also forecast that many Chinese smartphone brands such as Huawei, Xiaomi, Coolpad and Lenovo will likely show shipments three times bigger than those of HTC in 2014. This will make HTC more vulnerable when negotiating orders with telecom operators and distributors in the future, it predicted.

The pessimistic comments came after HTC forecast July 31 that its revenues will drop by 27-35 percent sequentially in the third quarter of the year to between NT$42 billion (US$1.4 billion) and NT$47 billion, marking the 12th consecutive quarter of declining sales year-on-year.

Chang Chia-lin, HTC's president of global sales and chief financial officer, attributed the expected sequential decline in revenues to an early delivery of products to distributors in the second quarter and a product transition period in the third quarter.

HTC shares closed down 0.74 percent at NT$135.0 Monday in Taipei, lagging behind a 0.54 increase in the broader market.

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