HTC warns of first ever operating loss

Taiwanese mobile phone maker HTC has warned it may make an operating loss – its first ever – in the third quarter, sending its shares down sharply.

Its shares fell 7% to 159.5 Taiwanese dollars, a near eight-year low.

On Tuesday, the firm warned that it may swing to an operating loss as its revenue projections missed analysts forecasts hurting investor morale.

It said its margins were hurt by “relatively higher cost structure” as well as the “lack of economy of scale”.

It said it expects its operating margin in the third quarter to fall to between zero and minus 8% on revenues of between T$50 to T$60bn ($1.7bn-$2bn; £1.1m-£1.3bn)

Most analysts had forecasting a margin of between 2-4% and revenues of close to T$72bn.

Once a major global player, HTC has seen its fortunes slide in recent times as it lost market share to rivals such as Samsung and Apple.

It net profit dipped 83% in the second quarter, from a year earlier.

While the company said it expected an improvement in the fourth quarter, some analysts were sceptical if it will be able to turn around things in the near-term.

“It doesn’t seem like the company has any strategy that can turn this around,” said Daniel Chang, an analyst at Macquarie Securities. 

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