Struggling smartphone vendor HTC (2498) warned on Monday that its performance may continue to worsen in the first quarter of 2013. The company said in a release that it expects revenue in the first quarter this year to be between flat and down 17% compared to the fourth quarter last year, when HTC posted its worst earnings in eight years. HTC’s Q1 guidance missed analysts’ expectations, sending shares down 1.55% in Taiwan on Monday. The vendor also noted that gross margins will likely be between 21% and 23% in the first quarter, flat or down from 23% in the prior quarter.

HTC hopes the upcoming launch of its new flagship M7 smartphone will help reverse its current slide, and it said it will focus on launching cheaper smartphones in markets like China to boost sales. During an interview last summer, HTC CEO Peter Chou stated that the company would not look to cheaper smartphones to bolster sales for fear that such a move might “destroy our brand image.”