TAIPEI: HTC, the world's No 4 smartphone brand, reported weaker-than-expected fourth-quarter results yesterday, depressed by increasing competition and rapidly falling prices for feature-jammed gadgets.

The company made a net profit of NT$5.579 billion ($175 million) in the fourth quarter of 2009, it said in a statement posted on its website, worse than market expectations for NT$7.18 billion and lower than the T$8.09 billion recorded a year ago.

"Prices are falling and competition is intensifying," said John Chiu, vice-president at Fuh Hwa Securities Investment Trust. "Although there's a lot of opportunity for growth, competition is increasingly intense and this will definitely eat into margins," he said.

The company did not release any forward-looking guidance in the statement, but usually holds a conference call at the end of the month when it announces its results.

HTC will manufacture a Google branded cellphone from this month, the two companies said on Tuesday, in a move that could help the Taiwanese handset maker improve sales.

The smartphone market is expected to grow by about 20 percent in 2010 from last year, research firm IDC said, outperforming its bigger cousin the PC.

Cellphone giant Nokia, Blackberry maker Research in Motion and iPhone maker Apple together take up about three quarters of the entire smartphone market.

"It's going to be an increasingly difficult market to compete in, with all these big PC brands and other cellphone makers stepping up their marketing efforts," said Fuh Hwa's Chiu.

HTC shares lost ground after the results were released, giving up gains of over 2 percent in earlier trade to close the session up 0.4 percent, and lagging behind a 1.42 percent advance on the benchmark TAIEX share index.

China Daily/Reuters

(HK Edition 01/07/2010 page2)