Business

HTC warns of first operating loss

HTC One
Image caption Some analysts have said the launch of new products was unlikely to have a big impact on HTC

Taiwanese mobile phone maker HTC has warned it may make an operating loss - its first ever - in the third quarter, sending its shares down sharply.

Its shares fell 7% to 159.5 Taiwanese dollars, a near eight-year low.

On Tuesday, the company warned that it may swing to an operating loss as its revenue projections missed analysts' forecasts, hurting investor morale.

It said its margins were hit by "relatively higher cost structure" as well as the "lack of economy of scale".

It said it expects its operating margin in the third quarter to fall to between zero and minus 8% on revenues of between 50bn and 60bn Taiwanese dollars (£1.3bn; $2bn).

Most analysts had forecast a margin of 2-4% and revenues close to 72bn Taiwanese dollars.

Dwindling fortunes

Once a major global player, HTC's fortunes have slid recently as it lost market share to rivals such as Samsung and Apple.

Its net profit dipped 83% in the second quarter from a year earlier.

In an attempt to revive growth, it has launched new products - including the HTC One - the response to which, it said, had been encouraging.

"With the help of HTC One, we have regained superphone market share across major markets including China," the company said.

It added that it plans to launch a range of innovative and competitive mid-tier products in the coming months, which it expects will help it "regain momentum and market share in these segments" in the coming months.

While the company said it expected an improvement in the fourth quarter, some analysts were sceptical that it would be able to improve in the near term.

"It doesn't seem like the company has any strategy that can turn this around," said Daniel Chang, an analyst at Macquarie Securities.

HTC shares have fallen 44% over the past 12 months and are trading at their lowest level since 2005.

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