Is HTC in trouble?

There have been quite a few blog posts about HTC's 4Q 2011 and full year 2011 performance. As stated here and here, the 4Q results were disappointing, while the full year results were encouraging. So let's look at the company's full year results (adjusted for exchange rates of New Taiwanese Dollar to US Dollar).

HTC yearly revenues, 2009 to 2011.

HTC revenues grew 111% in 2010, and 61.5% in 2011. These are pretty robust numbers. The smartphone industry growth has been between 55% and 65% according to analyst estimates, and HTC's growth seems to be in line with the industry growth. It all looks fine, until we take a look at the quarterly numbers (again adjusted for exchange rates at end of each quarter).

HTC Quarterly Revenues (USD Millions)

HTC had a record Q2 2011, and the decline started after that. The peak in Q2 2011 helped boost the full-year 2011 results.  
This is intriguing. Most mobile handset companies show better revenue numbers in the Q4 of any year, due to the Western holiday period. This should be expected from HTC, whose revenues are derived mostly from US and Europe. As mentioned in their 2010 annual report, US accounts for 50.6%, while EU accounts for 32.3% of total revenues. Asia and ROW (Rest Of the World) account for a low 17.1%.

HTC 2010 Geographical revenue breakdown (2010 Annual Report from http://www.htc.com/www/investor/

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HTC's revenues started declining from Q3 2011 and continues declining in Q4. I wonder what has caused this reversal of growth for this fast growing company? Could it be the patent litigation cases with Apple & Microsoft? Probably not, because, as stated in this post at FOSS Patents, the Apple litigation resulted in a sales ban for HTC which would start from April 2012. So this case could not have impacted HTC revenues in 2011. As for the Microsoft case, it ended with HTC agreeing to pay $5 per Android handset as a royalty. This certainly increases the cost of goods sold, and would have impacted HTC's gross margin, but not likely the revenues.

Maybe it was it just intense competition from Samsung Galaxy S-II and iPhone 4S? Or does this signal a larger trend of US & European smartphone preferences shifting from Android to iOS? It would be interesting to see what HTC's strategy is for 2012. I am predicting they would focus a bit more on Windows Phone, thus strengthening the promised "3rd eco-system".