HTC's scapegoat for profit plunge is the iPhone 4S

It's largely the fault of Apple, Inc.'s (AAPLhot-selling iPhone 4S.  That was HTC Corp. (TPE:2498) chief executive Peter Chou’s response, according to the Associated Press, when he was asked to explain why his company had plunged 35 percent in revenue and 70 percent in profit on a year-to-year basis.

Mid-2011, prior to the launch of the iPhone 4S, HTC was reportedly America's top-selling smartphone manufacturer.  But despite Mr Chou's perspective, HTC's problems do not appear to be caused by Apple alone.  After all, rival Android smartphone manufacturer Samsung Electronics Comp., Ltd. (KS:005930) also passed it, on its way to becoming the de facto leader of the Android world.

HTC's problems seem to be a mix of strong performance by competitors (Samsung, Apple), weak handset offerings from HTC, user interface bloat, and poor management.   HTC has fired its CFO and CEO Chou promises to "rearchitect our organization."

The Taiwanese phonemaker vows to stop cutting corners and "to achieve what we have wanted to deliver" in the form of high-profile flagship-worthy smartphones.  It points to its upcoming HTC One X, which launches next month on AT&T Inc. (T) and Sprint Nextel Corp. (S) in the U.S. as one such product.  The One X is expected to be locked-and-loaded with the latest iteration of HTC's Sense UI, which it promises is less bloated than past versions.


HTC had reported its unaudited financials early this month, but the AP report indicates that the audited financials have now been filed and are virtually identical to the dismal early April numbers.  HTC promise a big turnaround, with profit predicted to soar at least 50 percent in Q2 2012.

On watch from investors, the once coveted company has little margin for error in the ultra-competitive smartphone market.

Source: Associated Press

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook

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