HTC Corp., Asia’s second-largest smartphone maker, posted a record 79 percent drop in quarterly profit as competition from Samsung Electronics Co. and Apple Inc. drove down sales of the Taiwanese company’s devices.

Third-quarter net income slumped to T$3.9 billion ($133 million), the Taoyuan-based company said in a statement Monday. That missed the T$4.43 billion average of eight analysts’ estimates compiled by Bloomberg in the last 28 days.

HTC, maker of the One, Sensation and Desire handsets, lacked a “sense of urgency” while “bureaucracy crept in,” Chief Executive Officer Peter Chou said in an e-mail to employees in August. New models using Microsoft Corp.’s Windows and Google Inc.’s Android platforms may not be enough to offset continued gains by Samsung’s Galaxy and Apple’s iPhone models.

“HTC’s newly launched smartphones will not be a game changer for the company,” Richard Ko, who rates the stock underperform at KGI Securities Co. in Taipei, wrote in a report Monday after the announcement. “Competition in the smartphone space remains intense across all segments. We believe Apple and Samsung will continue to lead on brand, distribution channel, scale and cost.” 

HTC shares dropped 0.9 percent to close at T$287 in Taipei Monday before the earnings announcement. The stock has lost 42 percent this year, lagging behind a 7.7 percent advance in the benchmark Taiex index.

Third-quarter revenue fell 48 percent to T$70.2 billion, missing the T$75 billion average of eight analysts’ estimates compiled by Bloomberg in the last 28 days. The company on Aug. 3 forecast revenue of T$70 billion to NT$80 billion. Operating income declined 76 percent to T$4.9 billion.

HTC’s share of the global smartphone market in terms of shipments fell to 5.8 percent in the second quarter from 10.7 percent a year earlier, according to data compiled by Bloomberg Industries. Last month it released its first models based on Windows Phone 8, and last week announced revised versions of some Android-based devices.

Samsung, the world’s largest maker of mobile phones, last week reported record third-quarter operating profit, buoyed by continued gains by its Galaxy phones and tablets. Sales of the Galaxy S III passed 20 million units in the 100 days after its debut, the company said last month.

Apple sold 5 million units of its iPhone 5 in the first weekend after sales commenced in nine countries on Sept. 21, it said at the time. The Cupertino, California-based company began selling the device in 22 more countries on Sept. 28.

HTC needs to “kill bureaucracy” as “we have people in meeting and talking all the time but without decision, strategic direction or sense of urgency,” Chou wrote to workers in an August e-mail obtained by Bloomberg News. “Stay firm with the hero innovations,” he wrote.

Fourth-quarter net income may drop to T$5.2 billion, the fifth consecutive decline, on revenue of T$76.5 billion, according to estimates compiled by Bloomberg in the last 28 days. 

(Bloomberg)