HTC shares plunge as group cuts forecasts

Android smartphone pioneer blames downturn and growing competition as stock crashes by 7 per cent

The smartphone maker HTC shocked investors yesterday as it dramatically slashed its growth forecast, blaming the intense competition in the worldwide market.

HTC had predicted revenue growth of as much as 30 per cent in the last three months of the year. It admitted yesterday that it had lowered expectations to the level of the year before.

The company had already warned of a slight slowdown in October, but yesterday's news sent the stock spiralling lower in Taiwan trading yesterday. It fell 7 per cent, the maximum allowed in the market in a single day, before the shares were suspended.

Pierre Ferragu, a senior analyst with Sanford C Bernstein, said: "This new guidance takes us by complete surprise and is at odds with recent discussions we have had with distribution channels, especially in Europe."

HTC has grown rapidly as one of the premier developers of Android smartphones. Yet it has faced increasing competition from rival manufacturers, especially Samsung, with its Galaxy SII and Nexus devices. And the phone most likely to be in demand in the crucial run-up to Christmas is Apple's iPhone 4S, released earlier this month.

A spokeswoman for HTC said: "Due to global macro-economic downturn and market competition, the assumptions of 2011 fourth-quarter financial forecast provided earlier are no longer applicable," adding the revenues would be "approximately the same as the fourth quarter last year". Revenues in that period hit T$104bn (£2.2bn). In October, the group predicted fourth-quarter revenues this year would be between T$125bn and T$135bn, after the group posted revenues of T$125.8bn in the third quarter.

HTC's growth more than doubled in the first half of this year. Despite yesterday's disastrous revision, HTC said it still "has strong confidence in its products and operation," before adding that it expected growth to return before next summer.