HTC's guidance for revenues of NT$70 billion (US$2.37 billion), gross margin of 22-24% and operating margin of 1-3% for the second quarter of 2013 are lower than market expectations, according to industry observers.

The revenues of NT$70 billion projected for the second quarter of 2013 are comparable to the NT$70.2 billion posted in the third quarter of 2012, during which gross margin and operating margin were 25% and 7%, respectively, indicated the observers.

Based on the guidance, HTC is also expected to generate an EPS of NT$1-2 for the second quarter of 2013 compared to NT$8.90 recorded a year earlier, when revenues totaled NT$91 billion, and gross margin and operating margin stood at 27% and 9%, respectively, the observers pointed out.

At the company's latest investors conference, HTC CEO Peter Chou explained that the gross margin and operating margin are set lower for the second quarter because of product mix and rising advertising expenses.

But Chou stressed that the company expects an improvement in its gross margin in the third quarter as demand for its high-margin New HTC One will remain strong and its product mix will improve.

HTC's marketing expenses are expected to top NT$7 billion in the second quarter of 2013, up nearly 80% from NT$3.9 billion spent in the same quarter a year earlier, the observers estimated.

By: DocMemory
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