Taipei, Feb. 4 (CNA) Taiwan's HTC Corp. could see its golden window of opportunity close rapidly and could suffer a loss in revenues next year if the smartphone vendor fails to make improvements soon, U.S. bank Citigroup Inc. said Monday.
In its latest research note, Citigroup trimmed its target price for HTC to NT$205 (US$6.93) from NT$250 while maintaining a "sell" rating on the stock, after the company forecast lower-than-expected sales and margins for the current quarter.
Shares of HTC closed down 1.55 percent at NT$285.5 Monday before the company's conference call to present the details of its fourth-quarter results and its estimates for the January-March period.
"While we believe HTC has an opportunity to take advantage of Apple's product transition, its continuing to struggle with execution problems on component shortages and product delays," said Kevin Chang, a Taipei-based analyst at Citigroup.
"With Sony, Nokia and Blackberry all improving their products, and Apple's likely comeback in early 2014, we believe HTC's window is of limited duration," he wrote in the note.
If HTC cannot rebuild its brand and market share in 2013, it is likely to lose significant market share and record operating loss in 2014, Chang said.
He said HTC's weak forecast for the first quarter is partially due to the delayed shipments of its "M7" flagship model, which was likely due to the low yield rate of some components such as metal casings and antennas.
As a result, the M7 shipments during the first quarter are now estimated at only 500,000 units, down from Citigroup's previous forecast of over 3 million units, Chang noted.
HTC reported Monday that its first quarter sales could end up as low as 16.6 percent off its sales results for the previous quarter.
The Taoyuan-based company projected sales for the January-March period at between NT$50 billion (US$1.69 billion) and NT$60 billion, following consolidated sales of NT$60 billion in the fourth quarter of 2012.
HTC's gross margin is forecast to fall between 21 percent and 23 percent during the first quarter, with its operating margin pegged at 0.5 percent to 1 percent. Both forecasts are lower than the 23 percent in gross margin and 1 percent in operating margin it reported in the fourth quarter.
(By Jeffrey Wu)