TAIPEI—HTC Corp.'s 2498.TW +1.45% first-quarter net profit slumped 98% from a year earlier after sales suffered from the delayed launch of the company's new flagship smartphone.
The Taiwanese manufacturer has been struggling against the dominance of Samsung Electronics Co.005930.SE +0.53% and Apple Inc.AAPL +0.71% in the smartphone market, as well as the emergence of Chinese low-end market rivals. In 2010, HTC was the largest vendor in the U.S. of devices running Google Inc.'sGOOG -1.05% Android operating system.
HTC's net profit fell to 85 million New Taiwan dollars (US$2.8 million) for the three months ended March 31 from NT$4.47 billion a year earlier. The most recent result is HTC's lowest quarterly net profit since the company started selling products under its own brand in 2006.
Revenue fell 37% to NT$42.8 billion from NT$67.79 billion, coming in below the company's February guidance of between NT$50 billion and NT$60 billion.
HTC's global smartphone market share fell to 4.6% in 2012 from 8.8% in 2011, according to market-research firm IDC.
The company planned to introduce the new HTC One smartphone at the beginning of March, but a shortage of camera components delayed its initial release to the end of March and its U.S. release to April 19.
"HTC's whole schedule was thrown into disarray because of the HTC One, which meant it didn't have the revenue coming in but still had a lot of fixed costs," Mr. Lu said. "There will be some improvement this quarter in terms of the bottom line, but they still face a lot of competition."Profit is likely to recover in the second quarter as HTC One sales increase, said Daiwa Securities analyst Birdy Lu. The company has been touting the camera's performance in low light, and plans to more than double advertising spending under a new marketing chief.
HTC last week announced a collaboration with Facebook Inc. FB -1.98% on the HTC First smartphone, which places the social-networking company's content front and center on the device.
The Facebook software, called "Home," which will also be rolled out to other handset partners, fills up the screen with images from Facebook updates as soon as the smartphone is turned on and includes easy shortcuts for interacting with the user's friends.
HTC Chief Marketing Officer Benjamin Ho said the Facebook partnership is part of the company's efforts to attract more consumers, and the Facebook software will be rolled out to other HTC models in the future.
"There is value for HTC in getting its phones in as many consumer hands as possible," he said in an email. "In addition to our own highly anticipated devices, like the new HTC One, this is a way to do that."
However, analysts say the phone running Facebook Home will be more of a symbolic product than a sales driver, and that the company's turnaround will depend largely on the sales performance of the HTC One.
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