HTC Investors

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Convening of an investor conference concerning Q3 2010 Business Review
1.Date of the investor/press conference:2010/10/29

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

3.Financial and business related information:
3Q10 BUSINESS REVIEW
(1)3Q unit was 6.8mn which grew 143% yoy.
(2)3Q revenue reached NT$75.8bn which grew 124% yoy, better than original guidance.
(3)3Q GPM came in high end of original guidance range at 30.2%.
(4)3Q OPEX ratio came inline with original guidance at 13.9%; therefore, 3Q operating margin reached 16.3%.
*All the numbers above are based on consolidated financial statements.
 
STRATEGIC REVIEWS
(1)Fast scale expansion and the dramatic picking up momentum clearly delivers our strategic decision, made at the end of 2009, to grow scale and achieve profit growth. The ramping growth momentum continues to accelerate smart phone industry penetration rate.
a.Growing scale showed operating leverage on marketing spending and operation efficiency, therefore, resulting an improved operating margin.
b.Improved business sustainability is supported by ramping brand awareness, global operators partnership, broad base cutting edge product portfolio and effective market commercialization.
c.Our Android smart phone demand has been rapidly growing in North America since 2009. Now we are very excited to see Android demand ramping up strongly from Europe as well as Asia and management expects the Europe/Asia momentum to further accelerate toward the level of North America from 2011 onward.
(2)Key intangible asset of HTC brand value is our global commercialization capability to drive go-to-market and massive commercialization of industry new technology initiatives such as Android, Windows platforms and mobile broadband standards with global operator partners.
a.The successful launch of broad Windows Phone 7 portfolio (HTC 7 Surround, HTC 7 Trophy, HTC 7 Mozart, HTC 7 Pro, and HTC HD7) enabled more than 25 leading operators business engagement in US, Europe and Asia. The commitment of Windows Phone 7 reinforced our technology leadership and long term partnership with Microsoft.
b.Latest rollouts of Desire HD, Desire Z, T-Mobile G2 and myTouch, showed our core competency to stay on top of Android technology platform. We will continue to raise the bar of 2011 competitive landscape on technology innovations as well as attractive user experience.
c.Sprint EVO 4G and T-Mobile myTouch successfully embarked 4G speeds milestone at respective WiMax and HSPA+ networks in 2010.
(3)The second core intangible asset of HTC brand value is our corporate culture to push innovation; Latest HTC Sense and Product Design introductions not only deliver our commitment to achieve best user experience but also set the milestone of industry innovation.
a.Our latest HTC Sense, debut together with Desire HD and Desire Z announcement, is target to further renovate mobile internet user experience on multimedia applications, location based service, reading enjoyment and social network service.
b.A holistic approach to expand HTC Sense user experience and digital content management amid smart phone, PC and virtual cloud by launching HTC Sync and HTCSense.com platform.
c.Desire HD shows beautiful metal unibody design and a greatest visualism at 4.3” display. Desire Z ‘s creative 3 dimensional pop-hinge expands the user segment toward physical keypad requirement by no compromise on device thickness.
(4)Continuous ramping brand awareness: Brand Awareness stays strong with an increase to 47% at the end of 3Q, and we target to lift the brand awareness to 60% by year end.
a.“Quietly Brilliant” global brand positioning has been well accepted as how we focus to put “YOU” as a centre on everything we do and “Here's an idea” to emphasize what brilliant innovations HTC will bring “YOU” a great user experience.
b.HTC brand awareness not only has been ramping well amid the early stage smart phone adopters but our HTC Sense innovation and aggressive marketing spending has started to bring our brand recognition into mainstream consumer segment with great value proposition offerings.
c.We have initiated a global program of retail effectiveness targeting a leading in-store experience to facilitate HTC sense experience demonstration and consumer participation right at store level.?
 
MATERIAL BOARD RESOLUTIONS
(1)The Board approved a maximum NT$ 1.6bn budget to build a new factory building in Taoyuan, Taiwan for future growth.
(2)The Board approved two treasury share buyback programs. One is a maximum 5 million shares treasury share buyback program to transfer to employees for incentive purpose. The buyback period is from Nov 1st till Nov 30th, and the cap of buyback amount is NT$4.25 billion.
Another treasury shares buyback program is for cancellation of maximum 5 million shares within a cap of NT$4.25 billion, buyback period from Dec 1st till Dec 31th.
 
4Q10 BUSINESS OUTLOOK
(1)4Q unit expects to grow around 157% yoy to reach 9mn.
(2)4Q revenue expects to hit record high to approach NT$100 bn, up 143% yoy.
(3)GPM expects to be around 30% ± 0.5%.
(4)OPEX ratio expects to be at the range from 14% ± 0.5%.
*All the numbers above are based on consolidated financial statements.

4.Any other matters that need to be specified:The material for the investor conference is disclosed under corporate governance item on Market Observation Post system and HTC Corporation Website.