Has HTC HIt Bottom ?

Despite its worst quarterly performance in several years HTC Corp.actually beat some investors’ expectations.

Shares of the struggling Taiwanese smartphone maker were up as much as 3.1% in early Taipei trading Tuesday even after the company said yesterday its first-quarter net profit slumped 98% from a year earlier, to the lowest level since it began selling products under its own brand in 2006.

What’s prompting the rise?

Some in the market were actually expecting the troubled Taiwanese smartphone maker to post its first quarterly loss since listing on the stock market in 2002, so the 85 million New Taiwan dollar (US$2.8 million) earnings beat some expectations. Component shortages have bedeviled the launch of HTC’s new flagship smartphone, the HTC One, hindering its plans to boost sales and market share. Production is gradually increasing, although still unlikely to match demand soon, analysts say.

“Over the past week, people were expecting much worse,” said Yuanta Securities analyst Dennis Chan. “The fact that it’s still turning a profit counts as good news.”

The production bottleneck for the One emerged in early March, after which expectations that the phone’s sales would contribute meaningfully to HTC’s first quarter earnings quickly deteriorated. Analysts say HTC is poised to rebound, at least somewhat, this quarter, as sales of the One ramp up.

“With the bottlenecks in casing and camera modules gradually easing, shipments of (the One) should be able to ramp up in late April and May,” said Nomura analyst Anne Lee in a report. She said the company’s market share and stock price have probably hit near-term bottom, and that they will likely rebound in coming weeks.

But not everyone believes there will be a rebound. HTC had been banking on gaining back share by launching its flagship phone before market leaders Samsung Electronics Co. and Apple Inc.  Samsung’s Galaxy S 4 begins presale next week and Apple has new iPhones in the pipeline, which means the market will only get more competitive as the year goes on.

Also worth keeping in mind: while HTC’s shares are at NT$248.50 in early Tuesday trade, they are still down 54% from a year ago, and a far cry from the NT$1,300 all-time record set in April 2011.