Citing “Short-Term Difficulties”, HTC Forecasts Weak Q1, Significant Revenue Drop

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Gadgets Week in Review: Graham Band

Smartphones and tablets maker HTC this morning said it foresees a huge drop in revenue (PDF) in the first quarter, citing “short-term difficulties” as it gears up to – reportedly – launch four new phone models at the Mobile World Congress later this month.

The Taiwanese company sees revenue dropping as much as 36 percent in Q1, to between NT$65 billion and NT$70 billion (roughly $2.2 and $2.4 billion) due to this “product transition”.

In PR speak, that sound something like this:

Despite short-term difficulties, momentum will resume in the upcoming product cycle driven by HTC’s brand strength, innovation, and design/engineering capabilities

The smartphone maker also said it expected gross margin to come in at around 25 percent, and operating margin at 7.5 percent, which is down from 27.1 percent and 12.7 percent in the previous quarter. Again, HTC says it expects these margins to “normalize” after the debut of the new phones.

In other words, HTC has a heck of a lot riding on these new smartphones selling like hotcakes, as it feels the pressure from Apple’s overwhelming iPhone success and an increasing number of manufacturers churning out and selling competing Android-powered devices by the millions.

Also read:

It’s About Time: HTC To Refocus Smartphone Efforts Around “Hero” Devices

Is HTC’s 20% Revenue Dip Last Month A Sign Of Things To Come?