Once high-flying Android (s goog) manufacturer HTC reported weak fourth quarter results and forecast an even tougher first quarter as competition from Apple (s aapl) and Samsung squeezed the Taiwanese smartphone maker. HTC reported revenue of 101.42 billion Taiwan dollars or $3.48 billion with earnings of 10.94 billion Taiwanese dollars or $369 million, good for 13.06 Taiwan dollars per share (44 cents U.S.).
In the first quarter, HTC said it was expecting revenue of between 65 billion and 70 billion Taiwanese dollars or $2.20-2.37 billion, which could amount to as much as a 36 percent drop from the previous quarter. Analysts had expected HTC to generate $89.64 billion or $3.04 billion in revenue this quarter. HTC had previously released unaudited results for the fourth quarter but the forecast raised new concerns for HTC as it looks to regain its momentum.
HTC said the disappointing forecast stemmed from its transition to newer products, which will be previewed at the Mobile World Congress. It called the slow down “temporary.”
“Our weakness in first-quarter guidance also comes from facing competition in the U.S. from iPhone and Samsung,” said Chief Financial Officer Winston Yung said on a conference call. “LTE handsets also didn’t meet our expectations.”
HTC did not provide unit shipments for the fourth quarter — the first time it hasn’t done so — and declined to forecast unit sales for the first quarter. But it hopes to see improving sales as it applies more focus to its line-up. The company has been talking about putting out fewer phones and rallying around more “hero” devices.
“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.”
The company rode the wave behind Android and enjoyed a lot of growth along with the rest of the smartphone market. But as Samsung began cranking on Android phones, Apple exploded last quarter with an impressive showing on iPhone(s aapl) sales and low-end Chinese makers ZTE and Huawei came on strong, it has left HTC with less room to stand out.
Now, the company faces an uphill battle as it looks to remain relevant as a top Android manufacturer without some of the vertical advantages enjoyed by Samsung. Om has been talking about this for a while and has laid out the challenge for HTC and other Android makers in a market that is increasingly tough to compete in with Samsung commanding the top end and Chinese manufacturers moving up from the bottom.
HTC will hope that the HTC Ville, a 4.3-inch inch Android 4.0 device, and other upcoming devices can help lead a turnaround. But it’s unclear what will provide the real spark. The HTC Rezound was one of the top Android devices this fall from HTC but it got overshadowed by the Galaxy Nexus from Samsung and the Motorola Razr (s mmi). Does HTC still have gas in the tank? It could still compete but with Samsung the lead dog on Android and Nokia (s nok) the likely standard-bearer on Windows Phone (s msft), this transition period could take a while.