The results were slightly below market expectations (Reuters' poll indicated average expected earnings profit of NT$5.57 billion), and there's been a small drop in HTC's share price. However, in general, the results were not a surprise, given earlier results and HTC's comments on its financial outlook earlier in the year.
HTC has not yet released device sales numbers for Q3 2012, but they will be down on Q2 2012's figure of around 11.6 million smartphones, and may drop under the 10 million mark (a similar percentage drop as sales would see a smartphone shipment number of 9.4 million).
HTC's current smartphone sales are dominated by Android devices, with Windows Phone only contributing a small proportion of overall sales. The sales and profit decline is primarily due to increased competition from other Android vendors, most notably Samsung, although some commentators suggest that a major contributor to the decline is the long term impact of the company's unfocused 2011 smartphone portfolio.
The Android powered One series of smartphone, announced at MWC this year, were well received by reviewers, but did not enjoy the same level of sales success as the competing Samsung Galaxy SIII.
HTC will be hoping for a better result from its recently announced Windows Phone 8X and 8S by HTC smartphones, but will face competition from both Samsung (ATIV S) and Nokia (Lumia 920 and 820). The full impact of the Windows Phone device may not be felt until Q1 2013, as the first devices will not go on sale until November. Moreover, there are still questions about the potential momentum and popularity of the Windows Phone platform, with the addressable market size for the HTC 8X and 8S still relatively limited.
In the short term HTC will face further poor quarterly results in Q4 2012 and Q1 2013, with longer terms results dependent on both the trajectory of Windows Phone, and HTC's ability to produce hit models in 2013.