Phone Maker HTC Reports Tough Quarter and Forecasts Continued Pain Ahead

Taiwanese phone maker HTC on Monday reported a lackluster fourth quarter and predicted a further drop in sales and profit margins amid strong competition.

For the fourth quarter, HTC said it earned 10.94 billion Taiwanese dollars ($369 million), or 13.06 Taiwan dollars per share (44 cents U.S.), on revenue of 101.42 billion Taiwan dollars ($3.42 billion).

That’s a revenue drop of more than 2 percent from a year earlier, for a company that until recently had been seeing sales doubling those of prior periods.

HTC had already warned of the sales drop when it released unaudited results last month. However, its outlook for the current quarter offered a further disappointment.

The company forecast that, for the current quarter, sales will drop to between 65 billion and 70 billion Taiwanese dollars, with gross margins falling to 25 percent from last quarter’s 27 percent. HTC said it expects the dip in margins to be temporary.

“While short term performance may not meet the results as expected, we have gained further experience and advancement in the areas of brand management and product innovation,” CEO Peter Chou said in a statement. “These fundamental strengths and the groundwork we have laid will take us into 2012 with a renewed focus and determination.”

HTC was on a roll for much of 2010 and 2011, rapidly growing sales amid the surge in Android demand.

In Monday’s earnings release, the company reiterated its plans to focus on fewer new devices this year, a strategy similarly being undertaken by also-struggling Motorola.