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HTC Corp sales delayed due to patent dispute

business Updated: May 16, 2012 13:27 IST

U.S. sales of two new smartphones from Taiwan's HTC Corp will be delayed due to a patent dispute with Apple Inc , a fresh blow to the company as it tries to turn around declining sales in what was once its largest market.



The news knocked its shares down 5 percent.



Apple scored a narrow victory against HTC in a patent lawsuit in December over technology in the smartphones, one of many such disputes in the fiercely competitive smartphone market.



HTC said in a statement on Wednesday that "the U.S. availability of the HTC One X and HTC EVO 4G LTE has been delayed due to a standard U.S. Customs review of shipments that is required after an ITC (International Trade Commission) exclusion order".



Under that ruling, HTC phones with the disputed technology would be banned from entering the U.S. from April 19. HTC has said that it has a workaround in its new phones to avoid the technology. The shipments still require inspection however.



Some shipments of the One X model had reached the U.S. before the ban date, enabling the model's launch, but further shipments are being delayed, an HTC official in Taipei said.



U.S. operator AT&T, which has been carrying the One X model in store since May 6, says the smartphone is "out of stock" on its website.



The launch of the EVO 4G LTE by Sprint, originally scheduled for Friday, will be delayed. Sprint has been taking pre-orders on its website.



In its statement, HTC said it believes it is "in compliance with the ruling and HTC is working closely with customs to secure approval". Sprint and AT&T both declined to comment.



As of 0405 GMT, HTC shares were down 4.6 percent in a broader market down 1.3 percent.



"Previously, it was expected that general exclusion order from the patent infringement referred to only old models from HTC. However, the latest news suggest otherwise with all models (new and old) potentially at risk," Goldman Sachs said in a trading note to clients seen by Reuters.



It said the U.S. market was expected to account for 15-20 percent of HTC's second-quarter shipments, and this delay might hit the company's earnings this quarter and possibly in the third quarter, depending on how quickly HTC could resolve the issue.



Last month, HTC Chief Executive Officer Peter Chou said HTC would not return to the days when more than 50 percent of its revenue came from the United States, a market where it saw a big drop last year because of the fierce competition from Apple's iPhone 4S. [ID:nL3E8FH0MU]



Former contract maker HTC had a fairytale ride in 2010 and early 2011, when its shares more than tripled in the 14 months to April 2011. The company's sales grew four-fold in 1-1/2 years as consumers snapped up its innovative phones with their distinctive large clock numerals.



But it suffered an equally rapid fall from grace as its phones failed to keep up with Apple's AAPL.O iPhones and Samsung's 005930.KS Galaxy range.



In late February, HTC announced its One series of models with fast graphic chips and advanced music and photography functions, to generally positive reviews from analysts and tech bloggers.