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HTC's competitive edge might be short-lived: Barclays

2012/11/25 12:49:42

Taipei, Nov. 25 (CNA) Taiwan's HTC Corp. can only lead the highly competitive smartphone industry for a short period of time despite the advanced specifications in its new large-screen models, British bank Barclays Plc warned in a recent report.

The recent launch of HTC's 5-inch flagship smartphones -- named J Butterfly in Japan and Droid DNA in the United States - would most likely lead the market for three to six months in terms of high-end 1080p full-high definition display quality, the bank said.

Along with HTC's new models in China priced at 2,000 Chinese yuan (US$321), Barclays now expects HTC to ship 8.8 million smartphones in the first quarter of 2013, up from 7 million units in the fourth quarter of 2012.

However, Barclays believes "the window of opportunity for the new models will be brief" as it expects the 5-inch 1080p displays to become commoditized in the middle of 2013, the bank wrote in a Nov. 22 report.

Barclays analyst Dale Gai, who pegged a target price of NT$175 (US$6) on HTC stock and gave it an "underperform" rating, predicted that HTC would face three major risks in 2013.

One was the expectations for Apple Inc. to introduce a low-priced strategy in China through local telecom operators. As a result, HTC might also need to slash prices for its new models, Gai said.

In addition, Samsung Electronics Co.'s adoption of active-matrix organic light-emitting diode (AMOLED) ultra-sharp displays in its medium-range smartphones would hurt HTC's market share, he said.

Moreover, Gai said, the accelerating decline in Chinese vendors' average selling prices in the 1,000 to 2,000 Chinese yuan smartphone category, which was driven by the adoption of MediaTek Inc.'s low-cost quad-core solutions, could pressure HTC's pricing.

"We (see) better-than-expected (HTC) sales and margins in the first half of 2013 on new product launches, including the 5-inch Butterfly models and the next-generation models to be announced at the Mobile World Congress," Gai noted.

"However, we are still cautious on the second half of 2013, expecting competition to be intensified from Apple, Samsung and China brands, leading to erosion (in) average selling prices."

HTC shares closed up 1.48 percent at NT$240 on the local bourse Friday. The weighted index closed up 3.09 percent.

(By Jeffrey Wu)