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Monday, February 06, 2012, 05:58 am PT (08:58 am ET)

HTC cites competition from Apple's iPhone as profits drop 26%

HTC on Monday revealed that its handsets are struggling against Apple's iPhone, as well as Android-based smartphones from companies like Samsung, leading to a 26 percent drop in fourth-quarter profits.

The outlook for the current quarter is even worse, with HTC officials projecting a 36 percent drop, according to Apple 2.0. HTC Chief Financial Officer Winston Yung told investors on a conference call Monday that his company is in the midst of a product transition that will hurt sales in the next quarter.

"Our weakness in first-quarter guidance also comes from facing competition in the U.S. from iPhone and Samsung," Yung said. "LTE handsets also didn't meet our expectations."

In addition to being once of the first Android smartphone makers, HTC was also among the first to embrace 4G long-term evolution technology, the high-speed wireless data standard positioned to replace 3G. Apple has stayed away from LTE in its wireless devices, citing poor battery life with the first generation of 4G chips.

HTC declined to reveal any specific sales figures for its smartphones on Monday, so its unknown how the Taiwanese company fared unit-wise against the record 37 million iPhone sales Apple saw in the holiday quarter. HTC has promised to introduce four new handset models at the Barcelona Mobile World Congress, which will kick off on Monday, Feb. 27.

HTC has been closely aligned with Google Android since the mobile platform debuted in 2008. In fact, the HTC Dream, which was marketed in the U.S. as the T-Mobile G1, was the first phone on the market to run Android.

HTC


But since then, HTC has been surpassed by rival competitors who also build Android handsets. During the holiday quarter, Samsung is estimated to have sold about 32 million total smartphones, shy of Apple's 37 million.

HTC is also involved in a number of patent infringement suits with Apple, in which each has accused the other of stealing its ideas in smartphones. Apple won one such case against HTC in December related to "Data Detectors" in operating systems. Microsoft is believed to receive $5 per unit for each HTC Android device sold.