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HTC not ready for hotter competition: Barclays

TAIPEI -- The long-awaited launch of Apple Inc.'s new iPhone 5 will intensify the competition among high-end smartphones and raise concerns about Taiwanese handset vendor HTC Corp., British bank Barclays PLC said yesterday.

Apple unveiled a day earlier the iPhone 5 in the United States, sporting a larger 4-inch retina screen and a faster A6 dual-core processor. It is 18 percent thinner and 20 percent lighter than the iPhone 4S it is being marketed to supersede.

Boasting long-term evolution (LTE) wireless broadband connectivity, the iPhone 5 will go on sale in nine countries Sept. 21, plus an additional 20 countries Sept. 28, and will reach 100 countries by the end of the year with 240 carriers, the company's fastest roll-out ever.

"The iPhone 5 launch will intensify the competition among high-end smartphones, which is negative to HTC in our view," Kirk Yang, a Hong Kong-based analyst at Barclays, wrote in a note to clients.

"Although HTC will also announce its new models in the third quarter of 2012 and we believe its sales will recover in September-October, its fundamental weakness in product marketing remains one of our investment concerns," he said.

The new models, including three Windows 8-based phones and a flagship Android model that carries a larger and better-performing display, are expected to be launched Sept. 19 in a major HTC event in New York, the bank said.

Barclays maintained its "underweight" rating on HTC stock and its price target of NT$230 per share.

The British bank expects HTC to launch the new models in the third quarter of this year to compete with Apple and South Korea's Samsung Electronics Co. in the mid- to high-end segment.

Earlier in the week, HTC launched its HTC J smartphone in Taiwan and Hong Kong, in the hope that the model, which has been a hit in Japan, will help the company penetrate markets outside the U.S., which is dominated by Samsung and Apple.

The Taiwanese vendor also launched the Desire X in August and the One ST/SC/SU series in China to enrich its mid-range segment with dual-core processor upgrades.

While the selling points for most of the new products are HTC's advanced camera and Beats audio technology, Yang said he does not see very strong differentiation in terms of software/applications, which is seen as a key factor if the company wants to compete with iPhone's ecosystem and Samsung's hardware innovations.

"We believe the Windows 8 phone remains a non-event for the smartphone industry in 2012, and the huge volume from competitors in the fourth quarter of 2012 imply the low likelihood of HTC managing to win back meaningful market share," he said.

Barclays estimated iPhone 5 shipments to exceed 40 million units in the fourth quarter, while Samsung's flagship Galaxy S3 and Galaxy Note 2 phones will amount to 16 million units and 5 million units, respectively.

Shares of HTC closed 0.89 percent lower at NT$277.5 Thursday in Taipei.

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