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HTC forecasts Q3 decline despite poor Q2 financials

HTC has warned investors that it predicts heavy losses in the third quarter of this year.

The Taiwanese firm expects revenue of between NT$50 billion and NT$60 billion (£1.1 billion to £1.3 billion) for the three month period, blaming high costs associated with the production of the HTC One and strong competition in the mid-to-high-range smartphone markets for the fall.

CEO Peter Chou said, "The HTC One cost structure is high, we have expected it to improve but it is not where we want it to be."

According to Reuters (opens in new tab), a group of 22 analysts had previously forecasted third quarter revenue of above NT$75 billion (£1.6 billion), but it looks like HTC will miss that mark by a significant distance.

"Our overall gross margin has been impacted by a relatively higher cost structure, lack of economy of scale and certain provisions needed to facilitate the clearance of aging products," the company stated.

HTC posted worryingly low second quarter figures earlier this month (opens in new tab), recording profits of NT$1.25 billion (£27.9 million) and revenue of NT$70.7 billion (£1.6 billion) – both down from the same period last year.

The predicted Q3 results would represent a decline of around 30 per cent from Q2's numbers.

The company's only shining lights at the moment come in the form of the critically acclaimed HTC One (opens in new tab) and freshly-launched 4.3in HTC One mini (opens in new tab), which we found a better device than Samsung's Galaxy S4 Mini (opens in new tab).

HTC, however, is confident that it can stop the rot in the fourth quarter, through releasing a range of "innovative and competitive mid-tier products."

"We are hoping that [quarter three] is our bottom and we will see improvement in [quarter four]," concluded Chou.

Aatif is a freelance copywriter and journalist based in the UK. He’s written about technology, science and politics for publications including Gizmodo, The Independent, Trusted Reviews, Newsweek, and ITProPortal.