HTC says struggles will continue in Q3; forecasts 23% drop in sales, thinning margins

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HTC burned for $40 million as cloud gaming startup OnLive implodes
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HTC burned for $40 million as cloud gaming startup OnLive implodes

Struggling smartphone vendor HTC (2498) said on Friday that its business will continue to decline in the third quarter this year. The company last month reported a massive drop in profit and revenue during the second quarter, and alongside its now-audited Q2 results, HTC has forecast further decline in the third quarter. Revenue this quarter is seen falling 23% compared to the same period in 2011, and both gross margin and operating margin are seen thinning to 25% and 7%, respectively. In the second quarter, the vendor managed a gross margin of 27% and an operating margin of 9%. HTC saw huge success with its Android smartphones in 2011, reporting six consecutive months of record revenue. The company’s hot streak came to a screeching halt in October, however, as Apple’s (AAPL) new iPhone 4S burst onto the scene and competition from Samsung (005930) heated up.

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