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
RE: HTC failed to address what people wanted most
10/29/2012 12:27:29 PM
Their rep is hurt. If they can continue to demonstrate their phones are consistently good, that will restore faith. Short of that, either go budget or get out. Can't see it any other way.
"This is from the DailyTech.com. It's a science website." -- Rush Limbaugh
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
Staples Closing 225 Stores Across North America
March 7, 2014, 1:24 PM
HP Launches $170, 8" Android Tablet
March 7, 2014, 8:09 AM
Sony Computer Entertainment America CEO Jack Tretton Stepping Down
March 6, 2014, 8:52 PM
Apple Won't Let UK Sons Unlock Their Deceased Mother's iPad
March 6, 2014, 12:44 PM
Benchmarks for NVIDIA Tegra K1 Hit the web
March 6, 2014, 8:57 AM
Microsoft's Gates, Nadella, Bates Initially Opposed Nokia Acquisition; Said Microsoft Should Stick with Software
March 5, 2014, 1:33 PM
Most Popular Articles
Mt. Gox Bitcoin CEO Can't Stifle Grin as he Bows in Apology for Bankruptcy
February 28, 2014, 5:00 PM
Report: Microsoft Considering Offering Free “Windows 8.1 with Bing”
February 28, 2014, 10:21 AM
Facebook Kills Popular Messenger App for PCs
March 1, 2014, 4:01 PM
Two More Microsoft Executives Leaving the Company
March 3, 2014, 4:38 PM
USAF Moves Forward With Long Range Bomber Program Despite Budget Crunch
March 4, 2014, 9:44 AM
Latest Blog Posts
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
Global Cyber Espionage Concerns Reveal Growing Cyber Armies
Nov 29, 2013, 11:04 AM
Is The Period Becoming an Expression of Anger?
Nov 26, 2013, 2:02 PM
NSA and Congress -- You Will Never Kill the Constitution, It's an Idea
Nov 10, 2013, 2:00 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information