October 6, 2009 / 7:45 AM / in 8 years

UPDATE 1-HTC Q3 net profit lags forecast as prices slip

* Q3 net profit down 18 pct, misses forecast

* Q3 sales down 10 pct, hit by competition and falling prices

* Shares rise 0.71 pct on Tuesday, lagging main board (Adds details, analyst quote)

TAIPEI, Oct 6 (Reuters) - HTC 2498.TW, the world’s No. 4 smartphone brand, reported worse-than-expected third-quarter results on Tuesday, underscoring the intensifying competition and declining prices in the fast-growing sector.

HTC said it made a net profit of T$5.76 billion ($180 million) in the quarter ending September, lagging a consensus forecast of T$5.92 billion according to a survey of 17 analysts polled by Thomson Reuters I/B/E/S.

It also revised its year-ago net profit to T$6.99 billion.

“In the short term, the firm may have some strong sales momentum,” said Edward Yen, a UBS technology analyst who has a “buy” rating and a target price of T$375 on the company’s stock, which ended at T$355 on Tuesday.

“In the long run, there seem to be some structural issues with the way it’s run. They want to be a strong brand, but don’t want to spend on marketing. How can that work out if they want to compete with bigger players?”

Third-quarter revenue fell more than 10 percent from the same period a year ago to T$34 billion, as consumers hit by the economic slowdown looked to cheaper smartphone models.

The company did not provide any guidance in its statement, but said in July it expected revenue this year to fall by a low to mid-single digit percent. [ID:nTP127931]

It announced its results after the Taiwan stock market closed on Tuesday. Its shares were up 0.71 percent, lagging a 1.32 advance on the benchmark TAIEX share index .TWII.

HTC ranks behind bigger rivals Nokia NOK1V.HE, Apple AAPL.O and Blackberry maker Research In Motion RIM.TO RIMM.O in the smartphone sector, with PC makers such as Acer 2353.TW and Dell DELL.O now also jostling for a piece of the pie.

The growing competition has hit more established players, with Research In Motion offering an outlook for the holiday season that fell short of most market expectations. [ID:nN24466680]

Many analysts say HTC is being likely to be pressured by the increasing commoditisation of the smartphone, largely due to its reliance on Microsoft’s MSFT.O Windows Mobile operating system. [ID:nTP334399]

Smartphones are one of the few segments within the tech industry that are expected to see robust growth, with research firm IDC predicting that sales will climb about 20 percent to just over 200 million units next year. (Reporting by Kelvin Soh; Editing by Jonathan Hopfner)

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