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HTC chief downplays Apple patent case with ITC, calls it a 'distraction'

By Josh Ong
Friday, July 29, 2011, 07:25 pm PT (10:25 pm ET)

HTC Chief Executive Peter Chou attempted to calm investors on Friday by calling a recent ruling from the International Trade Commission, which found the Taiwanese handset maker guilty of infringing on two of Apple's patents, a mere "distraction" that will not affect his company's business.

At an investor conference on Friday, Chou said the company expects to grow revenue in the third quarter 80 percent year over year to NT$137 billion ($4.74 billion), The Wall Street Journal reports. He remained confident that the company would be unaffected by Apple's suit with the ITC.

The executive also reassured that HTC's recent purchase of S3 graphics would quickly prove worth its $300 million price tag. It has been suggested that the smartphone maker purchased S3 Graphics in order to gain leverage in its negotiations with Apple, which was recently found to be infringing on two of the graphics company's patents. Shares of HTC have slid 20 percent to NT$858 ($29.71) since the company announced its acquisition of S3 graphics.

Apple sued HTC last year, alleging that the company had violated several of its patents. Earlier this month, the federal agency issued an initial ruling in the iPhone maker's favor. Some industry watchers have said that the decision, if upheld by the commission, would be a devastating blow to HTC and Google's Android platform.

According to the report, Chou also indicated the company was "carefully assessing the tablet market" and would become more competitive in the space next year.

Chou reaffirmed the company's continued ability to grow, innovate and release quality products. HTC forecasts third-quarter smartphone shipments will jump 98 percent to 13.5 million units. The company shipped 12.1 million handsets in the June quarter. By comparison, Apple shipped 20.3 million iPhones in the same period, overtaking Nokia to become the world's largest smartphone maker.

However, analysts have voiced concerns over the company's long-term growth prospects. HTC's head of innovation Horace Luke, who played a significant part in the company's rise from contract manufacturer to global smartphone brand, left the company in April of this year. Capital Securities analyst Diana Wu said investors will be anxious to see what HTC can come up with after the last devices Luke helped design arrive in the first quarter of 2012.
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