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Shares of smartphone maker HTC have fallen by 7%, the maximum allowed in one day, after the company cut its growth forecast.

Taiwan-based HTC said on Wednesday that it expected revenues for the final three months of 2011 to be little changed from a year earlier.

The firm had earlier forecast growth of 20% to 30%.

HTC, the world's fourth-biggest smartphone brand, blamed increased competition and weakening demand.

Analysts and the markets were surprised by the statement filed with the Taiwan Stock Exchange.

"This new guidance takes us by complete surprise and is at odds with recent discussions we have had with distribution channels, especially in Europe," said Pierre Ferragu from Sanford Bernstein in a note to clients.

In October, the company had warned that fourth quarter revenue was slowing, predicting 125bn to 135bn New Taiwan dollars ($4.1bn-$4.4bn; £2.6bn-$2.9bn), compared with T$135.8bn in the previous three months.

Although HTC did not give a specific forecast for Wednesday's further downward revision, it said it predicted no growth compared to the same period last year. HTC's revenue in the last three months of 2010 was T$104bn.

Analysts said the grim outlook could be blamed on lack of new products to compete with an expansion in Apple's distribution channels in the US.

However, the company said it expected a pick up in revenue in the first half of 2012.