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HTC Says Fourth Quarter Fall is Temporary

Things are changing very quickly in the smartphone market and competition can reveal many things about the devices previously unknown. HTC lowers its fourth quarter guidance by about 23 % and this is already for the second time, thus the cost of the company’s shares fell to their lowest point in the year.

HTC explains this dramatic change by its recent move was due to the unusual competition situation in the market and slow global economic growth, but two analysts from Citigroup give their own different explanations. As Bloomberg announced earlier, Kevin Chang and Jonathan Gu stated in their research HTC’s low numbered fourth quarter is conditioned by the low quality of the products. They particularly said it “is driven more by inferior product than by macro reasons. We are most surprised by the lack of visibility and by how fast things deteriorate in the smartphone business.” The analysts reduced their recommendation on the stock to “sell” from “neutral” and cut their price estimate to NT$463.

Earlier HTC announced it is going to reevaluate $300 acquisition of 3S Graphics, after the latter could not win a patent suit against Apple. But HTC says it is confident this downward move is temporary and things will change in the first half of 2012.


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