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By | Phil Muncaster 7th February 2012 11:03

HTC wants a hug after glum Q1 estimates

Under-pressure biz seeks 'emotional connection' with punters

HTC could be in for a spot of bother in 2012 after its Q1 outlook missed analysts’ estimates. Commentators suggest the firm may struggle to compete with Apple, Samsung and the wealth of handset manufacturers crowding this increasingly competitive space.

The Taiwanese hardware manufacturer forecast revenue of about NT$65bn to NT$70bn (£1.4bn to £1.5bn) for the period, far lower than the NT$84.9bn (£1.81bn) forecast by analysts.

Operating margin was estimated by HTC at 7.5 per cent with gross margin at around 25 per cent. Unsurprisingly HTC put a brave face on it, claiming that these figures were a “temporary phenomenon” and would get back on track after “product cycle transition”.

“In 2011 we saw growth in the global strength of our brand, as well as earnings and revenue growth,” said the firm’s chief executive, Peter Chou, in a statement.

“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. These fundamental strengths and the groundwork we have laid will take us into 2012 with a renewed focus and determination.”

Analysts were less positive, however.

Gartner senior research analyst CK Lu told The Reg that HTC’s Q4 US sales took a sizeable hit from the iPhone, and failed to make up this loss in other markets, especially China, where 60 to 70 per cent of handsets are sold carrier-independent, or on the "open market".

Lu said: “Aside from the product mix, HTC is just not selling on the open market in China - they don’t have the channels or the brand. HTC has many confusing product lines so it’s difficult for it to make marketing spend usefully and for consumers to remember product lines.”

This lack of identity in an increasingly tough market could make this a make-or-break Mobile World Congress for the Taiwanese handset giant, but at least the firm appears to recognise where its weaknesses lie.

“To expand its brand preference and value, HTC will work at a global level to build emotional connections with consumers, putting more of its marketing resources behind fewer products and driving value in those product brands,” noted the waffle alongside HTC's 2011 results release. ®

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