HTC Makes Deep Cuts to R&D, Marketing, Amid Financial Panic
October 26, 2012 11:55 AM
comment(s) - last by
Troubled investments and troubled sales equate to a troubled HTC
Taiwan's HTC Corp. (
) is in trouble.
Struggling in global sales
a $40M USD hit
from its failed
OnLive cloud gaming investment
, the Taiwanese OEM posted dreary financials for Q3 2012.
Revenue came in at T$70.2B ($2.40B USD), while profit came in at T$3.9B ($133.1M USD). While over one hundred million in profit would be good news for many firms, you only need to glance at HTC's
to see the disturbing trend that has unfolded over the past several quarters:
HTC did have some success on the quarter. It launched the
HTC One X+
, a beefed up version of its Android flagship device. It also announced
the 8S and 8X
Windows Phone 8 smartphones, which it claims Microsoft Corp. (
) considers the "hero product" of the Windows Phone platform.
Also in the good news category HTC reduced its excess inventory. And it made a bold $35M USD investment in Magnet Systems, a U.S. firm which HTC describes as "the creator of next-generation software platform for [the] mobile enterprise market."
But in the bad news category, HTC's gross margin -- a measure of return on sales -- has slid from 28 percent to 25 percent in the last year. And HTC's slumping earnings have forced it to cut R&D spending by 15 percent, cut advertising/marketing by nearly 45 percent, and cut administrative overhead by 30 percent.
Struggling phonemaker HTC will be a lot more "quietly" brilliant: it's cutting its marketing spending by approximately 40 percent. [Image Source: Reuters]
Such cuts can be a double-edged sword. On the one hand they may help HTC's financials in the short term. On the other hand, cutting your marketing budget nearly in half and making substantial cuts to your R&D budget can hurt revenue in the long terms as customers will be less aware of your product and your product won't be as cutting edge.
slumping global economy
HTC predicted an even worse holiday Q4 2012. It expects revenue of T$60B ($2.05B USD) and a gross margin of 23.0 percent. That's approximately 40 percent less revenue than HTC made last holiday season.
This article is over a month old, voting and posting comments is disabled
10/26/2012 1:11:18 PM
Perhaps an agreement between several struggling competitors to share IP and R&D efforts could bring a reduction of overhead while maintaining their unique identities in implementation.
10/26/2012 1:33:01 PM
with SOCs being made by only a handful of companies, and screens by another handful, and OSes by either google or MS, isn't the only "unique identity" smartphone makers have their crappy, laggy, useless android skins?
10/26/2012 1:56:16 PM
Maybe so, or perhaps just the contours in shape, the choice of battery, the colors and materials of outer skin, the name of the offering company.
I kind of like the idea of a t-shirt that says:
"I successfully copied Apple but only got this crappy iPhone"
Disclaimer: Not responsible for the opinions of the UK courts.
"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
TSMC Predicts Slump, Stakes 2013 Rebound Hopes on 28 nm Mobile Chips
October 25, 2012, 1:33 PM
HTC's Woes Continue as it Posts Big Earnings Miss
October 8, 2012, 10:40 AM
HTC Introduces New One X+ Smartphone
October 2, 2012, 9:10 AM
HTC Hedges Android Bet With Colorful New Windows Phones
September 19, 2012, 2:42 PM
With Tens of Millions in Debt, Cloud Gaming Firm OnLive Barely Survived
August 23, 2012, 1:52 PM
Samsung Reveals Metal Unibody Galaxy A5, A3 Smartphones
October 31, 2014, 9:27 AM
Amazon Exec on Fire Phone: “We didn’t get the price right”
October 31, 2014, 8:22 AM
Moto 360 to go "Champagne Gold" for $299, According to Amazon Listing
October 30, 2014, 3:24 PM
Call-capable Samsung Gear S Smartwatch Launches Nov 7 in U.S.
October 30, 2014, 12:45 PM
Lenovo Completes $2.91B Acquisition of Motorola
October 30, 2014, 11:57 AM
Samsung Electronics Q3 Profit Falls by 60%, Mobile Division Sees 74% Profit Decline
October 30, 2014, 10:10 AM
Most Popular Articles
1 Million Credit Card Activated on Apple Pay Within 72 Hours, Walmart CEO Hopes Visa "Suffers"
October 28, 2014, 8:17 AM
Amid Theater Boycott Netflix Defiantly Plans New Movies, Plus 3 TV Shows for 2015
October 24, 2014, 7:30 PM
CVS, Rite Aid Kill Unofficial Apple Pay Support, Burn Google Wallet Users in the Process
October 25, 2014, 5:26 PM
Microsoft's Figures Show Desktop Users Flocking to Windows 10 Preview
October 27, 2014, 11:04 AM
Fitbit's $249 Surge Fitness Watch Packs 7-Day Battery Life, Two Other Models Also Air
October 27, 2014, 4:20 PM
Latest Blog Posts
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information