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Originally published Friday, August 3, 2012 at 2:45 AM

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Smartphone maker HTC posts 58 percent profit drop

Taiwan smartphone maker HTC Corp. reported its third consecutive drop in quarterly profit as intensifying competition from Apple Inc. and Samsung Electronics Co. hurt sales.

The Associated Press

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TAIPEI, Taiwan —

Taiwan smartphone maker HTC Corp. reported its third consecutive drop in quarterly profit as intensifying competition from Apple Inc. and Samsung Electronics Co. hurt sales.

HTC said Friday that profit dropped 58 percent to 7.4 billion New Taiwan dollars ($248 million) from revenue of NT$91 billion in the three months through June. It reported a 70 percent drop in the first quarter and a 26 percent drop in the final quarter last year.

HTC has grown on the strength of the design of its handsets, based on Google's Android operating system. But its sales have fallen sharply in a global market increasingly dominated by Apple Inc. and Samsung Electronics Co.

The company predicted third quarter revenue of NT$70-80 billion, down 41-48 percent from the same period last year.

HTC had hoped to win back some of its market with the launch of "HTC One" series, which offers users a better camera and music experience. But following the huge popularity of Samsung's Galaxy handsets, the model's key U.S. carrier, AT&T, recently slashed the prices of "HTC One" by half, which may hurt HTC revenue.

As a young business which only began building its own global brand in 2006, HTC chief financial officer Chang Chia-lin recognized that the company "needed to work harder" to lure consumers to its handsets in a volatile and competitive market.

Chang said the U.S. will continue to be an important market, but the emerging China market "will be a key driving force for our future growth."

He declined to comment on whether the Chinese market's preference for low-end, low-priced handsets would drive down the company's overall revenue.

Last month, HTC announced it was selling half of the 50 percent stake it had bought in U.S. headphone maker, Dr. Dre's Beats Electronics, raising concerns about the soundness of the company's acquisition strategy.

Chang said the equity sale is to "create a win-win situation" to give Beats' managers more flexibility to boost their product value. But he indicated the need for more caution in investment.

"We will continue to invest in the future," Chang said. "But we will allocate resources to focus on key growth areas, such as production innovation, sales and marketing."

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