HTC Investors

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Convening of an investor conference concerning Q1 09 Business Review
1.Date of the investor/press conference:2009/04/30

2.Location of the investor/press conference:Conference call

3.Financial and business related information:
1Q09 BUSINESS REVIEW:
(1)1Q revenue achieved 95.7% of guidance at NT$31.59bn, down 3% YoY, slightly below the NT$33bn guidance. The shortfall was caused by delay on new product ramp.
(2)1Q GPM came in line with guidance at 30.1%, slightly better than guidance assumption.
(3)1Q OPEX ratio was 14.7% (better than 15% guidance); therefore, 1Q operating margin came at 15.3%, also better than 15% guidance.
*Starting from this conference call, all margins will be under post-bonus bases.
** All the numbers above are based on unconsolidated financial statements.

MATERIAL BOARD RESOLUTIONS:
(1)Dividend Payout
a.Cash Dividend: NT$27 per share.
b.Stock Dividend: NT$0.5 per share.
(2)Employee Bonus:
a.Cash : NT$1.21bn.
b.Stock* : NT$4.95bn. (The number of shares shall be calculated based on the closing price one day prior to the 2009 regular shareholders’ meeting on an ex-dividend basis.)
(3)Approved a cap of employee bonus dilution of 1.75% this year. If the shares of stock bonus calculated by the closing price prior to the date of annual shareholders meeting reach the cap, the surplus amount will use cash bonus instead.
(4)Approved to restructure HTC offshore investments, to simplify the holding structure by function and geography and improve transparency.
*In 2006, HTC issued 8,000,000 shares of employee stock bonus and the Board approved the buyback and cancellation of treasury share of 3,624,000 shares in the same year.
**In 2008, HTC issued 10,320,000 shares of employee stock bonus and the Board approved the buyback and cancellation of treasury share of 10,000,000 shares in the same year.

BUSINESS ENVIRONMENT:
(1)Converging devices momentum remains relatively resilient against to a sharp contraction of broad mobile device industry impacted by a slowing world economy.
(2)At early stage of mobile broadband cycle, significant growth potential still exists for players who has sustainable competitive product portfolio. Attractive return of investment will be rewarded to the innovation to drive excellent user experience and enhance productivity at mobility.
(3)Mobile internet experience has been appreciated from subscribers on devices such as Touch Diamond, Touch HD and G1 even in economic downturn. Desires for innovative user-friendly interface, such as web browsing, email access, and location based application, are highly expected from upcoming converging devices like Magic, Diamond2, Pro2 and Snap.

MANAGEMENT INITIATIVES:
(1)The launch of latest Windows family (Cruise 09, Diamond2, Pro2, Snap) not only demonstrates our commitment to enrich Windows Mobile user experience by superior performance enhancement and killer innovative feature sets (people centre communication, push Internet, straight-talk, inner circle) at rich form factor portfolio but also shows our belief of Windows Mobile value and strategic partnership with Microsoft.
(2)G1 has named Android a successful and compelling platform. The launch of 2nd  Android member “Magic” is our immediate respond to emerging operator interest and management aims to ramp up Android portfolio to meet accelerated demand around the world.
(3)Core competency has been expanded from platform leadership toward great user experience focus. Seamless integration of solid hardware, software and product design teams powers HTC innovation into time-to-market converging product roadmap.
(4)Global operator franchise has advanced to another milestone: constructive and strategic relationship has been well established with major US operators, together with already close European operator partnership, which strengthens HTC  brand creation and product innovation.

1Q09 P&L (UNCONSOLIDATED):
(NT$ Billion)     1Q 08    4Q 08    1Q 09    QOQ     YOY
REVENUES          32.70    47.38    31.59   -33.3%  - 3.4%
GROSS PROFIT      11.66    14.10     9.50   -32.6%  -18.5%
RSGA EXPENSE       4.25     5.46     4.64   -15.0%    9.2%
NOP                7.46     8.66     4.84   -44.1%   -35.0%
NPBT               7.65     8.94     5.39   -39.7%   -29.6%
NPAT               6.94     8.09     4.87   -39.7%   -29.8%
GPM(%)            35.6%    29.8%    30.1%
RSGA RATIO        13.0%    11.5%    14.7%
EPS*(NT$)         12.12    10.73     6.54
*The EPS was calculated based on the outstanding shares at the time.

1Q09 P&L (CONSOLIDATED):
(NT$ Billion)     1Q 08    4Q 08    1Q 09    QOQ     YOY
REVENUES          32.68    47.07    31.41  -33.3%   - 3.9%
GROSS PROFIT      11.64    14.18     9.61  -32.2%   -17.4%
RSGA EXPENSE       4.48     5.31     4.59  -13.6%     2.4%
NOP                7.17     8.88     5.03  -43.4%   -29.9%
NPBT               7.65     8.97     5.44  -39.4%   -28.9%
NPAT               6.94     8.09     4.87  -39.7%   -29.8%
GPM               35.6%    30.1%    30.6%
RSGA RATIO        13.7%    11.3%    14.6%
EPS*2(NT$)        12.12    10.73     6.54
*1Attributable to stockholders of parent company, excluding minority interest.
*2The EPS was calculated based on the outstanding shares at the time.

1Q09 KEY FINANCIALS (UNCONSOLIDATED):
(NT$ Billion)         Mar 31,08   Dec 31,08   Mar 31,09   QOQ     YOY
CASH*                   63.47       61.83       71.72    16.0%   13.0%
AR                      16.67       29.80       17.56   -41.1%    5.3%
INVENTORY                7.75        7.42        4.64   -37.4%  -40.1%
NET WORTH               62.93       60.66       65.64     8.2%    4.3%
INVENTORY PROVISON       1.13        1.62        2.35    44.5%   108.1%
AR PROVISION             0.29        0.55        0.75    35.6%   155.5%
WARRANTY PROVISION       4.02        5.23        4.84   - 7.3%    20.4%
*Includes cash equivalents.

1Q09 KEY FINANCIALS (CONSOLIDATED):
(NT$ Billion)         Mar 31,08   Dec 31,08   Mar 31,09   QOQ     YOY
CASH*1                  64.81       64.24       73.98    15.2%   14.1%
AR                      16.58       29.45       17.28   -41.3%    4.2%
INVENTORY                8.59        8.25        5.78   -29.9%  -32.7%
NET WORTH*2             62.93       60.66       65.64     8.2%    4.3%
INVENTORY PROVISION      1.45        1.91        2.57    34.4%   77.5%
AR PROVISION             0.46        0.58        0.78    34.8%   67.8%
WARRANTY PROVISION       4.02        5.23        4.85   - 7.3%   20.5%
*1Includes cash equivalents.
*2Attributable to stockholders of parent company, excluding minority interest.

2Q09 BUSINESS OUTLOOK:
(1)2Q revenue expects to grow above high single digit YoY or from NT$37.5bn to NT$38.5bn. The growth magnitude depends on ramping speed of new products and macro condition.
(2)GPM expects to be around 31%± 0.2%, slightly higher than 1Q09’s 30%, and improvement majorly contributes from product mix.
(3)OPEX ratio expects to be around 14.5%± 0.2%, slightly lower than 1Q09’s 14.7%.
(4)1Q’s launched new products (3 Windows & 1 Android family) will fully ramp up in 2Q. In addition, at least a couple new products will launch in 2Q.
(5)Annual business guidance remains unchanged on both revenue growth and OPEX ratio.
*Starting from this conference call, all margins will be under post-bonus bases.
** All the numbers above are based on unconsolidated financial statements.

4.Any other matters that need to be specified:None