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HTC Q3 Profit Beats Estimates as Cost Cuts Offset Weak Sales

Year-to-date revenue through September was down 13 percent.

Reuters / Pichi Chuang

Taiwanese smartphone maker HTC swung to better-than-expected profit in the third quarter from a heavy loss a year earlier, as cost cuts helped it offset the impact of still-sluggish sales.

HTC said on Friday it earned T$640 million ($21 million) in unaudited net profit during the July-September quarter, well above a T$216.23 million mean estimate of 13 analysts polled by Thomson Reuters. In the same period a year earlier, it turned in a loss of T$3 billion.

The company makes devices, such as its flagship One M8, that consistently garner accolades from critics but fail to lure customers. The former contract manufacturer has struggled to maintain a distinctive brand image in an increasingly crowded marketplace.

HTC said during its last quarterly earnings briefing that improved efficiency in its sales and marketing operations would help the company maintain profitability in July-September after booking losses in third quarter 2013 and the first quarter of this year.

Sales in July dropped 33 percent from the same month a year earlier, but recovered to rise by 10 percent in August compared with the year-earlier month, the company has said.

HTC’s sales in September fell 7.9 percent on year to T$16.7 billion, the company said in a separate release on Friday, adding year-to-date revenue through September was down 13 percent to T$140 billion.

While HTC’s sales slip, the overall smartphone market is buoyant. Researcher IDC predicts worldwide smartphone shipments will expand by 24 percent this year, while Silicon Valley powerhouse Apple moved a record number of new iPhones during the models’ first weekend of sales.

Brisk business for the iPhone 6, which many view as the main competitor to HTC’s One M8, likely cut into HTC’s sales in September, SinoPac Securities analyst Calvin Huang wrote in a recent research note.

Shares of HTC closed up 2.3 percent before the earnings release, compared with a 1.5 percent gain in the benchmark TAIEX index.

(Reporting by Michael Gold and Faith Hung; Editing by Kenneth Maxwell)

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