Print 27 comment(s) - last by bug77.. on Jul 10 at 7:55 AM

Sales, profits, fall short of analyst expectations and early forecasts

HTC Corp. (TPE:2498), Taiwan's largest smartphone maker, released its unaudited results for the second calendar quarter, which ran from April through June.  The results were very poor.

Analysts had expected a recovery to a profit of $8.99B TWD [source].  Instead, HTC under-delivered, posting $7.4B TWD ($247.7M USD) in earnings.  That's down remarkably from the $17.52B TWD that the company pulled in last year.

Revenue was $91B TWD, less than the $94B TWD predicted by analysts.

A number of factors combined to yield the disappointing quarter for HTC.  One negative was a temporary sales ban in the U.S. that stalled the release of certain flagship handsets.  That sales ban came despite HTC vocally agreeing to comply with an Apple, Inc. (AAPL) feature ban.  HTC removed the infringing feature, but was treated with a lengthy delay anyhow.

The company was boosted when the U.S. International Trade Commission refused to grant a hasty "emergency" ban in Apple's third trade complaint against it.  However, that small victory came as little consolation in the wake of the costly market delay.

But the biggest single factor dragging HTC down was arguably the weakening European economy.  Amid the U.S. sales ban, HTC was hit by a double whammy when customers in cash-strapped European nations opted to skip purchases.

HTC has struggled to compete with the flagship handsets of Apple and rival South Korean Android manufacturer Samsung Electronics Comp., Ltd. (KSC:005930).  Samsung also struggled with European sales issues, but its much stronger profit margins and global sales led it to an impressive profit outcome.

EU flags
A weak European market cost HTC, amid stalled U.S. sales. [Image Source:]

Still, all is not lost for HTC, which has grown in multiple since it exploded onto the market in 2010.  The former contractor remains a premiere manufacturer, but weakening revenue and profitability have forced it to commit to trimming its workforce.  The company said likely 1,000 employees would be cut globally.

HTC's flagship U.S. smartphones -- the HTC One X and EVO 4G LTE -- remain quite competitive with Apple and Samsung's product in terms of features, even if they are underappreciated.

Shares of HTC stock were battered over 5 percent in trading on Taipei, Taiwan's stock exchange.

Source: HTC

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Reap what you saw
By bug77 on 7/7/2012 12:05:36 PM , Rating: 3
If I wasn't still waiting for ICS, I might have recommended HTC to 2-3 friends. Sense/TouchWiz/whatever are not marketable, no one buys phones because of them, stop wasting resources. Or, add enough resources to port your additions to a new Android version within a month.

RE: Reap what you saw
By sprockkets on 7/8/2012 1:08:22 AM , Rating: 2
They don't? Sense 3 and 3.6 on the HTC Sensation can control the music app without unlocking, and their notification shade had easy access to recently used apps before ICS. They had the unlock ring before ICS. Further, their phone app has the usual HTC touches like speakerphone on flipping the phone over (been on HTC products since around 2007), or play the ringtone louder if in a pocket, then quiet it down when you pick up the phone toward your face.

All of that is not in stock ICS. And if they don't exist in the SG3, I'm not interested. I know though Samsung did put some other nice touches on their SG3 though.

RE: Reap what you saw
By bug77 on 7/8/2012 6:28:16 AM , Rating: 2
I didn't mean to say Sense is completely useless. But it's not a reason to delay an update for 9 months. I'm pretty sure all the nifty stuff you mention can be sold separately through the Play Store. And by that, I mean those could be made into normal applications rather than integrating them with the OS to the point that makes an upgrade unfeasible.

RE: Reap what you saw
By sprockkets on 7/8/2012 6:03:41 PM , Rating: 2
When you actually watch development of the RUU's, you find out it has more to do with writing drivers for all the hardware to work with the new Linux kernel, not because of "skins". They had a working ICS rom but stuff like wifi sharing and such just didn't work yet.

But even if it did delay it, HTC at least made sense work very well with the new ICS guidelines (and bleeping apple added to the delay of the US launch by their stupid patent lawsuit).

RE: Reap what you saw
By bug77 on 7/9/2012 4:49:10 AM , Rating: 2
Come on, it's not like they have to rewrite the drivers with each release. Android works on Nexus phones from the start, so at least some drivers are ok. Linus releases several kernels a year and these are working on a much larger hardware selection.
Bottom line, put enough resources on the job to get it done quickly or stop doing it at all.

RE: Reap what you saw
By dark matter on 7/9/2012 9:21:49 AM , Rating: 2
ICS really requires 1Gb of RAM. Unless your phone has 1Gb of Ram, then don't expect it to get ICS.

If you have an iPhone 3G, it will NOT run IOS6.

Where is the difference?

Do you still expect a Windows 98 machine to run Windows 7?

RE: Reap what you saw
By bug77 on 7/9/2012 10:04:02 AM , Rating: 2
Very nice, but it usually helps when you know what you're talking about:
That would be ICS+Sense 4.0 on a phone with just 512MB RAM.

RE: Reap what you saw
By rudy on 7/9/2012 3:21:21 PM , Rating: 2
But then what would anyone buy an HTC phone for? HTC has no vertical integration, they dont make the main components nor have tons of money. Apple can secure contracts to get the latest displays from LG, Samsung makes nang, cpus, displays so they can keep the best for themself. HTC does not do any of this. So the only thing they have is quality of phone design and software. Lets be honest today a phone is a rectange with a display thats it, nothing more so there is nothing but the display, speeds as in CPU and software to set them apart.

Get it HTC is stuck making sense, they have no way out unless they can somehow buy into a leading display maker.

RE: Reap what you saw
By bug77 on 7/10/2012 7:55:43 AM , Rating: 2
Phone manufacturers had no problem competing on hardware before the smartphone came to be. Design, ruggedness, battery life, signal strength are all very important features that many reviews these days don't even bother to mention. No, we have to know how good is the FB integration. Ok, design is always mentioned, but battery life is almost always hidden under a 'YMMV' statement.

I'm also fine with competing on software if so they choose. But in this case, 'I released ICS after only 7 months, not 8-9 like the competition' is not acceptable.

By StormyKnight on 7/6/2012 7:36:59 PM , Rating: 2
Though I don't care much for phones with skins and bloatware, I really hope that HTC manages to survive. Competition is necessary to get the absolute best product from each company in each market. Without competition you'll have stagnation and nothing to strive for. Can you imagine a world without competition? We'd probably just now be using Willamette P4 for $1500/cpu. I don't even want to think what the cell phones would be like. Brick in a bag anyone?

RE: Support
By StevoLincolnite on 7/6/2012 7:57:57 PM , Rating: 2
Without competition you'll have stagnation and nothing to strive for.

Not always true.
When a company has a market cornered it's biggest inhibitor to growth can be it's own success.
In other words they need to innovate so people will be willing to upgrade, this would have been the case with Intel.
Why would anyone upgrade if they are stuck with the same processor for years?

RE: Support
By Motoman on 7/6/2012 8:08:49 PM , Rating: 1
...if AMD wasn't around, your next Intel CPU might cost $500.'d be happy to be stuck with the same processor for years.

RE: Support
By StevoLincolnite on 7/6/2012 10:37:33 PM , Rating: 3
Well, Intel has had CPU's over that $1000 mark already, have had since the Pentium 4. :P

I'm not arguing that competition isn't good, just that there are usually more than just one incentive that a company needs to innovate.

RE: Support
By xdrol on 7/9/2012 4:51:51 AM , Rating: 2
There is a slight difference between "has CPUs over 1000 USD" and "only has CPUs over 1000 USD".

RE: Support
By Stevethewalrus on 7/6/2012 11:58:57 PM , Rating: 2
Ya except for now Intel has to compete with other companies indirectly, so far there chips have only made it into a few tablets( windows slates anyways) and 1 phone that I know of, and that's really what they have to compete with, ARM, not AMD.

RE: Support
By Flunk on 7/7/2012 11:59:57 AM , Rating: 3
The problem with CPUs is that while they cost a lot to develop and build fabs for the per unit production cost is pretty low. It's in chipmaker's best interests to provide inexpensive chips at high volume just as much as it is to provide high end chips at low volume. The profit margin is fairly similar.

If the cheapest Intel CPU was $500 or $1000 they would lose so many sales that it wouldn't make sense for them financially.

RE: Support
By SandmanWN on 7/8/2012 1:15:28 PM , Rating: 1
No it isn't in their best interest at all.
If Intel could sell chips at $500 where they now have to sell at $100 with competition, they would take the $500 deal in a heartbeat. Who the hell would want to make 500 times as many products to make the same amount of money???

RE: Support
By StormyKnight on 7/7/2012 3:10:23 AM , Rating: 2
There would be stagnation hence my P4 Willamette comment. There would be no need to throw tons of money into R&D to make the next best thing. You could just tweak an existing design for years and still charge outrageous amounts of money for it and people will buy it. Why innovate when you can make more money for less effort???

With AMD's competition, it pushed Intel to stay ahead. Hell, it even pushed them more when they lost the performance crown to the Athlon series. So, if there was no AMD we'd be using lackluster CPUs not nearly as powerful as the ones we have today.

Same goes for any product whether it is electronics, automotive, retail stores, phone companies, wireless companies, etc etc etc, without competition we'd have inferior products at higher prices. Competition is good.

dear htc
By Bubbacub on 7/7/2012 3:19:03 AM , Rating: 1
Get rid of sense and sell stock android.
Don't put a battery hogging tegra 3 CPU with two thirds the battery life and inferior performance in your European phones and then you won't have to bitch about your poor EU sales.

People want user replaceable betteries.


P.s. I've ditched my HTC desire this week for a galaxy nexus.

RE: dear htc
By Ytsejamer1 on 7/7/2012 8:49:32 AM , Rating: 2
It's too bad actually. Sense v2 and 3 were became very bloated and HTC went back to the drawing board and Sense v4 is actually pretty smooth and svelte. Samsung on the other hand seems to be loading their TouchWiz with every piece of garbage they can find...rarely leaving room for OS upgrades and the like.

I like Sense, but agree that it'd be nice to have at least an option to use the default Android environment.

I've been pretty happy with HTC but have to admit, the Samsung devices are absolutely stunning.

RE: dear htc
By sprockkets on 7/8/2012 1:19:27 AM , Rating: 2
Don't put a battery hogging tegra 3 CPU with two thirds the battery life and inferior performance in your European phones and then you won't have to bitch about your poor EU sales.

Two thirds? Yeah right.

Except for web browsing the One X Int comes up above the SG3, and that's even with a smaller battery. The GNex doesn't do much better either.

But hey it's stock!

RE: dear htc
By sprockkets on 7/8/2012 6:09:23 PM , Rating: 2
Oh wait, the link didn't post??? Here's proof for the moron who rated me down:

RE: dear htc
By Bubbacub on 7/9/2012 4:31:29 AM , Rating: 2
in web browsing on 3g - (the most common battery draining task that i ever ask of my phone) the usa version gives 9.65hrs vs 6.9 hrs on the tegra 3 version.

9.65/6.9 = 0.71 ok a tincy wincy bit more than 2/3.

By piroroadkill on 7/9/2012 4:43:32 AM , Rating: 2
Hey, how about a MicroSD slot in the high end devices? Also, dual core Krait, not Tegra 3, and give us a battery the capacity of the Motorola RAZR MAXX.

Then.. THEN you'd have a device I could recommend all over. Oh, and stop growing the screens at an uncomfortable pace(!) 960x540 @ 4.3" is more than enough, all this 720p nonsense just chews up battery life on pixels you can't see.

By kaalus on 7/9/2012 12:16:22 PM , Rating: 2
There is not enough competition. The reason is proliferation of multi-billion dollar behemoths like Apple, Microsoft or Intel. I don't think any type of business requires profits of that magnitude to operate efficiently.

One good idea would be to introduce company size tax. For example any profit by above $1bn should be taxed at 99%. Massive companies would instantly split of their own volition. No need for antitrust legislation. No more affecting of legislation by massive corporations through buying politicians.

We don't need companies that have more revenue than a small country.

If this tax was introduced, Intel would split into some 15 smaller companies. Microsoft and Apple into about 20.

CPU prices would spiral down. All operating systems would be free overnight with innovation rate skyrocketing.

By melgross on 7/7/2012 1:51:16 PM , Rating: 1
They're making much more out of this short ban than it's worth. Before the ban, HTC's numbers were already down by a third. The quarter before that they were down by about a quarter. This is just another excuse to try to make things look better for them.

The fact is, they aren't doing very well these days. Their Android phone sales are being swallowed by Samsung, as is everyone else's. Then the rising iPhone marketshare is having an effect. Their Win Phone sales have never gone anywhere either.

It may be sad, but their problems are their own.

By PittmanKen18 on 7/6/12, Rating: -1
"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard

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