HTC positive about 2010 despite weak Q4

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Taiwanese mobile hardware maker HTC says it is confident of strong revenues in 2010 as it seeks to turn around a 31 per cent year-on-year drop in profits in Q4 2009.

Speaking in a conference call to discuss his company's weak fourth quarter earnings, HTC chief executive Peter Chou told analysts yesterday that, despite the poor results, the company was expecting to return to revenue growth in Q1 2010.

However, overall profits are expected to remain weak throughout the year as older products are replaced and the company aggressively targets mobile rivals on price.

Chou said he expects sales for the first quarter to rise seven per cent year on year to around $32-34 billion Taiwanese (610 million - 650 million), though gross profit margins are expected to fall from 32 to 30 per cent.

"The margin they're forecasting is a little worse than I'd expected," Arthur Hsieh, an analyst at UBS, told Reuters. "But that's something they'll have to accept, because prices will come down if HTC wants to target the mass market."

Earlier this month, HTC announced fourth quarter earnings down to $5.6 billion Taiwanese (107 million) and sales down 13 per cent to $41 billion (787 million), with analysts suggesting the weak results were the result of a heavy marketing push to gain market traction in Europe and US.

And despite benefiting from the increasing market share of Google's open-source Android OS still present on more HTC handsets than on any other manufacturer's increasing Android-based alternatives from other phone makers also had an effect.

However, the company said the future remained rosy thanks to its partnership with Google as hardware partner for its Nexus One project and the exposure it would give to Android-based products around it.

In addition, Chou confirmed HTC's continued commitment to working with Microsoft and its Windows Mobile operating system, particularly with the high-powered HD2 smartphone finally set for launch in the US in the spring.