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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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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.

"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il

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