Taiwan's HTC weak Q1, pickup in Q2 on new models

TAIPEI Feb 6 (Reuters) - Taiwan smartphone maker HTC (2498.TW) said on Friday it expects to post only a small gain in first quarter revenue as customers sell down inventory, but that momentum could pick up by the second quarter on new products.

HTC also said it expects operating profit margin to fall to 15 percent in the first quarter compared to 18.4 percent in the fourth. It said it expects to take an inventory write-down of T$600 million in the first quarter.

The company, whose competitors include Research in Motion (RIM.TO), Apple (AAPL.O) and Nokia (NOK1V.HE), said it expects first quarter revenue to be about T$33 billion ($980 million), slightly higher than the T$32.7 billion a year before.

HTC began its life as a contract manufacturer of cellphones but has sharply scaled back that business in recent years in favour of its own brand phones, which carry higher margins. It said it now expects to phase out contract work, which makes up less than 10 percent of revenue, by the end of this year.

The company reported a fall in 2008 full-year net profit to T$28.7 billion ($854 million) in January this year, due to a regulatory change requiring companies to expense employee bonuses.

(Reporting by Kelvin Soh; editing by Ken Wills)