HTC sees its 4Q profit drop 90%

HTC sees its 4Q profit drop 90 percent

HTC sees its 4Q profit drop 90 percent

On the 7th of December, HTC Corp. reported its lowest net profit in 8 years as its devices continued to lose with smartphones produced by Apple Inc. and Samsung Electronics Co. A lack of new models certainly affected the financial results of the Taiwanese smartphone producer which saw its fourth quarter profit drop approximately 91 percent.

HTC profit slumps

HTC Corp., which is the Asia’s second-largest smartphone maker, has been struggling in the market due to harsh global economic condition and the fierce competition from Apple Inc. and Samsung Electronics Co. Latest data showed that Taiwanese smartphone company HTC Corp. saw its net profit in the fourth quarter of 2012 drop approximately 91 percent to T$1 billion, or slightly over $34.4 million, from  roughly T$11 in the same three months a year earlier and about T$3.9 billion in the third quarter of 2012.

Certainly the company is not in the best mood as its fourth-quarter net income is the lowest since 2004. Yet analysts highlight that it still topped analysts’ estimates of nearly T$765 million. The company, which happens to be the world’s fifth-biggest smartphone maker, informed that its fourth-quarter consolidated revenue decreased over 40 percent to about T$60 billion.

The disappointing results were mainly caused by the lack of new smartphones. Apple Inc. and Samsung Electronics Co. took advantage of that by taking market share from the Asia’s second largest smartphone maker. Analysts underlined that no new products were the main cause of the weak results noted by HTC Corp. Yet the introduction of the new one, Butterfly, should have a positive impact on the company starting from the first quarter of 2013.

Going back on top

Peter Chou, chief executive officer at HTC Corp., is strongly convinced that the new year, 2013, will be much better for the company. The company wants to win its market share back as it tries to make a big comeback in the smartphone market. According to several sources familiar with the matter, top executives gave motivational speeches to the company’s workers while the Asia’s second-largest smartphone maker was gearing up to the “battle”.

Yet experts are more than skeptical about the big comeback of HTC Corp. and the company’s future itself. As the environment is changing quickly, the successful comeback depends on the HTC Corp.’s abilities of introducing innovative devices and improving its marketing as well. Analysts underline that the competition for the No.3 position is rather fierce and that HTC Corp. has many rivals for that spot, including Huawei Technologies Co., Lenovo Group Ltd, Nokia Corp. and others.

HTC Corp. might still have its bright days ahead of itself as the company is expected to release its long-awaited device named “M7” sometime in the beginning of 2013. But the company needs to rethink its marketing strategy especially in the U.S. market where its position is continually weakening. Everything indicates that HTC Corp. will have to focus on other markets, including Asian ones and other emerging markets as well. Still even there the competition is strong and fierce. For example, HTC Corp. does not give up easily and it wants also to concentrate more on China’s market, which is the world’s largest smartphone market, yet even there companies including ZTE Corp. and Huawei Technologies Co. want to enter the exclusive segment and dominate the market, thereby making conditions even more difficult. If HTC Corp. wants to be back on top, it must rethink and reprioritize its approach.

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Aubrey Chang
Aubrey Chang, Associate Editor Industry Leaders Magazine (www.industryleadersmagazine.com)

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