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HTC warns of likely loss next quarter

Shares tumble to a nearly eight-year low

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Taiwanese mobile-maker HTC has warned that it may have its first ever operating loss in the third quarter, sending its shares sliding nearly seven per cent.

HTC said in a statement announcing its Q2 results that its margins had been hit by "the relatively higher cost structure, lack of economy of scale and certain provisions needed to facilitate the clearance of aging products in the channel". The company added that it expected to see some improvement in the fourth quarter.

Investors reacted poorly to the news that operating margins were expected to fall to between zero and minus eight per cent on revenue of between T$50bn and T$60bn ($1.7bn-$2bn; £1.1m-£1.3bn), sending shares down to T$159.50, their lowest price in nearly eight years.

The company also announced that its net profit in the quarter ending in June had slipped 83 per cent from the same time last year to T$1.1bn.

HTC has seen its share of the mobile market plummet against rivals like Samsung and Apple, although it claims that its newest smartphone, the HTC One, has been very well received.

"The new HTC One has performed well in the market, better than... our hero products for the same period last year," the firm said. "With the help of HTC One, we have regained smartphone market share across major markets including China." ®

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