HTC, despite strong demand in China, nervous for fourth quarter

Smartphone maker HTC, trailing competitors Samsung and Apple, had mixed news for investors, announcing its third quarter results. It sold 13.2 million smartphones during the quarter — up 93% from the same quarter a year ago but only 9% from the quarter before.

Competitor Apple, even with fans waiting on a new iPhone, sold 17.07 million smartphones, while a less-specific Samsung sold still more, with smartphone sales up 40% from the quarter before and 300% from a year ago.

Despite Western holiday sales, HTC warned that during its fourth quarter it expects shipments between 12 million and 13 million units — an increase of up to 42% year over year, but a fall from the third quarter. Earnings, too, while improving on the year-ago quarter, are expected to fall below the third quarter's.

Chinese consumers were a key to the Taiwan-based company's success during the quarter, just as they have been for Apple and others. Noting that it's looking to "capture early brand preference in China," HTC launched its Sensation handset with two major carriers there and enjoyed sales that were nine times greater than in the region a year ago. During the fourth quarter, its retail presence in China will increase to 2,000 outlets, and early next year it's expected to complete construction of a new factory capable of increasing capacity by 40 million units annually.

"Certainly in my lifetime, I've never seen a country with as many people rising into the middle class that aspire to buy products that Apple makes," Apple CEO Tim Cook said in his most recent earnings call. "It's an area of enormous opportunity, and it has quickly become number two on our list of top-revenue countries, very, very quickly."

In the U.S., however, HTC faces competition from Samsung, Apple's new iPhone 4S, and even RIM, LG and, soon with more force, Nokia, which last week introduced its anticipated first Windows Phone device, the Nokia Lumia.

“We pride ourselves on anticipating market and consumer needs and addressing them before they are realized. We are growing rapidly and responsibly around the globe and continue to expand our leadership in new areas, such as LTE,” said HTC CEO Peter Chou in a statement.

HTC's earnings coincided with the U.S. release of the HTC Vivid on the AT&T network — one of the first LTE-enabled Android smartphones to arrive on the network.

The Vivid features a 4.5-inch qHD display, a dual-core 1.2GHz processor, and streaming video to a television with "zero waiting time and no buffering." Priced at $200 with a two-year contract, it'll go on sale Nov. 6 — the same day AT&T's LTE network expands to Boston, Washington D.C., Baltimore, Indianapolis and Athens, Ga.

“We aim to lead the way as the smartphone market continues to expand and change rapidly,” said Chou.