The battle for smartphone supremacy between Asia's largest handset makers has left profits at Taiwanese firm HTC plummeting as South Korea's Samsung Electronics rakes in the rewards.
HTC on Friday reported a 70% year-on-year profit drop, its biggest since listing a decade ago. First quarter net income after tax was 4.46bn New Taiwan dollars (£95m), lower than the NT$4.62bn consensus forecast.
In a bruising year, Samsung has emerged as the only one of the larger manufacturers to expand its smartphone business in the face of unstoppable progress from Apple's iPhone. Samsung's results, published on the same day as HTC's, show operating profits doubled from 2.95tn won (£1.6bn) to 5.8tn won in the first quarter, roundly beating forecasts. Gains from selling phones and television sets helped mask a slump in the group's chip business.
Propelled by sales of its Galaxy range, Samsung is thought to have sold 44m smartphones in the three months to 31 March, exceeding Apple's shipments "by a significant margin" and triple the number reported a year earlier, according to Seoul-based analyst CLSA Asia-Pacific Markets.
Apple has yet to announce its results for March, but sold 37m iPhones in the Christmas period, just after the launch of its latest model, the 4S.
Samsung's quarterly sales jumped 22% to 45tn won, and operating profit at the telecommunications unit more than doubled to 3.5tn won, according to estimates by analysts surveyed by Bloomberg.
Profits at Samsung's semiconductor division may have fallen 28% to 1.2tn won on sales of 8.65tn won, estimates Bloomberg.
Success with phones has soured Samsung's relationship with Apple, which is also its biggest customer. The South Korean company makes computer chips and displays for Apple. The two groups have been suing each other in court rooms around the world for patent infringement on phones and tablets.
Samsung increased its share of worldwide smartphone sales from 9% to 23% in 2011, according to research firm IDC, while HTC's share dipped from 8.5% to 6.5%. The only other top six manufacturer to grow was Apple, which emerged with the largest slice at 23.5%, up from 16% at the end of 2010.
HTC's own finance director, Winston Yung, admitted in February the company had made mistakes with new products at the end of last year, saying some of its handsets were too thick and offered insufficient battery life.
"We simply dropped the ball on products in the fourth quarter," Yung said. "The form factor could be better and the product design could be better. So we've learned lessons from the fourth quarter products."
HTC's revenues fell 35% year on year to NT$67.79bn. Founded in 1997, HTC in recent years has switched from making white label phones for mobile networks to manufacturing under its own brand. It enjoyed a fairytale when shares more than tripled in the 14 months to April 2011 and sales grew four-fold.
But the Taipei-listed company fell behind during the second half of 2011 and its share price has fallen by 50% in a year.
HTC on Friday reported a 70% year-on-year profit drop, its biggest since listing a decade ago. First quarter net income after tax was 4.46bn New Taiwan dollars (£95m), lower than the NT$4.62bn consensus forecast.
In a bruising year, Samsung has emerged as the only one of the larger manufacturers to expand its smartphone business in the face of unstoppable progress from Apple's iPhone. Samsung's results, published on the same day as HTC's, show operating profits doubled from 2.95tn won (£1.6bn) to 5.8tn won in the first quarter, roundly beating forecasts. Gains from selling phones and television sets helped mask a slump in the group's chip business.
Propelled by sales of its Galaxy range, Samsung is thought to have sold 44m smartphones in the three months to 31 March, exceeding Apple's shipments "by a significant margin" and triple the number reported a year earlier, according to Seoul-based analyst CLSA Asia-Pacific Markets.
Apple has yet to announce its results for March, but sold 37m iPhones in the Christmas period, just after the launch of its latest model, the 4S.
Samsung's quarterly sales jumped 22% to 45tn won, and operating profit at the telecommunications unit more than doubled to 3.5tn won, according to estimates by analysts surveyed by Bloomberg.
Profits at Samsung's semiconductor division may have fallen 28% to 1.2tn won on sales of 8.65tn won, estimates Bloomberg.
Success with phones has soured Samsung's relationship with Apple, which is also its biggest customer. The South Korean company makes computer chips and displays for Apple. The two groups have been suing each other in court rooms around the world for patent infringement on phones and tablets.
Samsung increased its share of worldwide smartphone sales from 9% to 23% in 2011, according to research firm IDC, while HTC's share dipped from 8.5% to 6.5%. The only other top six manufacturer to grow was Apple, which emerged with the largest slice at 23.5%, up from 16% at the end of 2010.
HTC's own finance director, Winston Yung, admitted in February the company had made mistakes with new products at the end of last year, saying some of its handsets were too thick and offered insufficient battery life.
"We simply dropped the ball on products in the fourth quarter," Yung said. "The form factor could be better and the product design could be better. So we've learned lessons from the fourth quarter products."
HTC's revenues fell 35% year on year to NT$67.79bn. Founded in 1997, HTC in recent years has switched from making white label phones for mobile networks to manufacturing under its own brand. It enjoyed a fairytale when shares more than tripled in the 14 months to April 2011 and sales grew four-fold.
But the Taipei-listed company fell behind during the second half of 2011 and its share price has fallen by 50% in a year.
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