HTC Badly Misses Profit Expectations, Delayed HTC One Final Starts to Trickle Out
April 8, 2013 1:00 PM
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Things aren't looking very good for Taiwan's top Android phonemaker
Six quarters have came and went, and in each one Taiwan's HTC Corp. (
) has seen its once rising star turn into a financial failure. But this most recent one was arguably as bad as any as the Android smartphone maker's
unaudited Q1 2013
earnings have badly missed on analyst earnings expectations.
I. Another Miss
of 19 analysts by
had predicted a net profit of NT$600M ($19.97M USD). A separate
of 16 analysts by UK-based
, a Pearson PLC unit (
), predicted a slightly leaner NT$287M ($9.56M USD). Instead, HTC managed to miss both targets, essentially breaking even for the quarter with a net earnings of NT$85M ($2.83M USD).
Revenue fell to a new low of NT$42.8B ($1.42B USD), versus a
analyst prediction of NT$54.7B ($1.82B USD) or a
analyst prediction of NT$53.8B ($1.79B USD).
HTC is on the brink of no longer turning a profit. [Image Source: Reuters]
Worse yet, the operating margin -- a measure of profitability -- was around 0.1 percent, less than the 0.5-1 percent HTC had forecasted. To put that in perspective, Samsung Electronics Comp., Ltd. (
) has a margin of 14.4 percent; while Apple has an industry-leading operating margin of around 33.46 percent.
HTC has seen its profits shattered over the last year and a half. [Image Source: Gadget Stress]
HTC's new marketing chief Benjamin Ho has tried ardently to reinvent the company's image,
scrapping its "quietly brilliant" motto
a more belligerent advertising stance
towards rivals. However, his efforts have been
hampered by delays
to HTC's flagship
HTC One 1080p Android smartphone
, delays that originated from a snub from a camera components retailer who had downgraded the Taiwanese OEM from "preferred" status.
II. More Trouble Ahead
HTC is slowly ramping up HTC One production and sales this month. However, that leaves it with a far leaner window to market before
Samsung's hot Galaxy S IV
than it anticipated. The Galaxy S IV launches on April 26.
The HTC One suffered a costly delay due to a parts snub. [Image Source: HTC]
Taipei, Taiwan-based Yuanta Securities Comp. (
) warns that the dire Q1 2013 financials may only be a precursor to the Q2 2013 bloodbath, saying that the HTC One shipping delays will cost the phonemaker. Yuanta analyst Dennis Cheng comments to
, "These numbers show the production shortage really is that bad, and my sense is that it won’t get much better in the second quarter because many of those issues continue. For smartphones, timing is everything and the delay means they lose that timing."
Sources close to the company have said that HTC's
embattled long-time CEO Peter Chou
had told employees late last year that he would step down if the HTC One did not reverse his struggling firm's fortunes.
The worst is not yet over for HTC. [Image Source: SOC Wallpapers]
largest U.S. phonemaker in late 2011
, HTC today is no longer even the second largest
phonemaker, passed by China's ZTE Corp. (
Technologies Comp. (
Aside from shipping delays one under-examined factor in HTC's decline is the cost of the
"patent tax" paid to Microsoft
, Inc. (
). While HTC did
brag about getting a "bargain" from Apple
in terms of patent licensing, and it at least no longer has to worry about bans, it reportedly must pay $10 USD per device to Microsoft and around $5 USD to Apple per device. That's far from HTC's only problem, but paying licensing fees is one more factor battering the phonemaker's margins.
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My plans for when I get my S4
4/9/2013 5:39:46 AM
I'm getting the S4 because it supports removable storage and a removable battery.
I can therefore pay $55 to add 64GB of storage to my phone, in the form of a microSD card.
I'll also be able to pay
$34 to add a 7000mAh ZeroLemon battery
and TPU case to my phone, which extends the battery size by
or 3x over the HTC One. It's on Amazon,
My S4 80GB 7000mAh will have the most storage capacity and battery life out of any phone on the market. I'll be able to put anything I want on my phone, and use it for as long as I want.
If you're an iPhone or Nexus person, you'll be very happy with an HTC One. The display, camera, and speakers are better on the One:
-The display is much brighter and therefore much more easily visible outdoors
-Camera is slightly better in low-light conditions and has a larger FOV.
-The speakers are properly positioned on the front of the phone!
Now if only Samsung would make a phone with a brighter display and front speakers, my life would be complete..
RE: My plans for when I get my S4
4/9/2013 9:12:17 AM
That's an awesome battery. Good price too. It is the expandability and accessories like that that really broaden and strengthen a market. Which is why I never understood why the crApple/HTC approach
so successful. Well HTC is getting reamed and even Apple is starting to slow down.
RE: My plans for when I get my S4
4/9/2013 10:27:01 AM
Money for the better display went to fund Best Buy kiosks and negative PR spin
"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer
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