HTC expects Q3 revenue drop, only China to see growth

Things aren’t getting better anytime soon for Taiwanese manufacturer HTC, which today forecast a difficult third quarter, with sales declines in every region except China.

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The company announced its consolidated second quarter earnings today with revenues of $3.04 billion and profits of $247.7 million (pretty much the same as the unaudited earnings HTC released earlier this month). For the third quarter, HTC expects revenue to fall between $2.3 billion and $2.7 billion, Reuters reports. Analysts expected the company to earn around $2.92 billion in Q3.

“China will continue to see growth in the third quarter, while other markets will have different degrees of decline,” HTC CFO Chialin Chang said at an investor conference today. “Europe, Middle East, and Africa will face challenges because of macro softness and competition.”

HTC previously blamed U.S. customs delays and slow sales in Europe for its disappointing second quarter earnings.

Not only are revenues expected to fall, but HTC also said that its margins will drop in the third quarter. The company expects a gross margin of 25 percent (down from 27 percent) and an operating margin of 7 percent (down from 9 percent). Basically, that means that HTC’s overall profits will likely end up being disappointing next quarter as well.

HTC’s popularity exploded with the rise of Android over the last few years, but once Samsung locked in the Android lead with its Galaxy S phones, HTC has had trouble delivering a hit device. The company’s recent One series phones are its best yet, but now those are competing with Samsung’s popular Galaxy S III and will soon face the next iPhone.

Photo Devindra Hardawar/VentureBeat