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HTC forecasts poor third quarter results, near-global decline

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HTC has released a forecast for its third financial quarter, when it expects to see a return to the disastrous form it showed in the first quarter of this year.

Gallery Photo: HTC One Series hands-on photos
Gallery Photo: HTC One Series hands-on photos

HTC has released its consolidated results for the second financial quarter, revealing figures in line with the unaudited report it posted last month. The Taiwanese company also gave a forecast for its third financial quarter, which it anticipates will be as tough as the first quarter of this year. It forecasts overall revenue to be somewhere between NT$70 billion (around $2.34 billion) and NT$80 billion ($2.67 billion) — a large drop from its NT$91 billion ($3.04 billion) Q2 revenue, but still slightly above the NT$67.8 billion ($2.26 billion) it posted in Q1.

While HTC's incoming revenue should be slightly higher than Q1, its gross and operating margins are set to be very poor. The company expects a 25 percent gross margin, down from 27 percent last quarter, and a lowly 7 percent operating margin, down from 9 percent last quarter. In practical terms, that means if the company hits its minimum $2.34 billion target dead on, a 7 percent operating margin would give an operating profit of $163.8 million.

Speaking at an investor conference today, HTC's chief financial officer Chialin Chang said that only China would see growth, with other markets facing "different degrees of decline." Reuters reports that Chang went on to explain that HTC's operations in Europe, the Middle East and Africa face a particularly daunting task due to challenging market conditions and competition. HTC will post its unaudited Q3 figures at the start of October.