From Bad To Worse: HTC Reports Lowest Net Income Since 2004

by Gaurav Kheterpal on January 8, 2013

It’s an open secret that HTC, the once strong Android partner is quickly slipping into irrelevance. While Samsung has made the most of the Android opportunity to assert itself in the global smartphone market, things haven’t gone as per plan for HTC.  To make matters worse, HTC capitulated to Apple’s legal pressure, forced yet again to sign a licensing deal worth hundreds of thousands of dollars per annum in order to settle its ongoing patent dispute.

Therefore, it was no surprise that HTC reported dismal quarterly numbers last August. Though the company tried to remedy this problem with several new initiatives – launching new lines like the HTC One series, the Desire series, the EVO 4G LTE and the Droid Incredibly 4G LTE, unveiling the company’s new digital content program called “HTC Connect,” and lately investing US$35.4 million in Silicon Valley-based enterprise apps provider Magnet Systems, nothing seems to be going right.

HTC yesterday reported its worst slump since 2004 as its fourth quarter net profit plunged 91 percent from a year ago.

Reuters reports that HTC’s unaudited October-December net profit was T$1 billion ($34.48 million), the world’s fifth-largest smartphone maker said on Monday, down from T$11.02 billion in the same period a year earlier and T$3.9 billion in the previous quarter. Revenue dropped 41 percent to NT$60 billion, compared with the NT$60.5 billion average of 23 analyst estimates.

So, what then is the problem with HTC? As my fellow blogger Matt Klassen pointed out

“Its early innovation with Google’s Android platform established HTC as a smartphone leader several years ago, but much like other big names in the mobile market like RIM and Nokia, the Taiwanese company simply failed to continue to innovate, watching its mobile momentum come to a grinding halt. In fact, while new HTC releases are finding some success in China, here in North American the company has simply not been able to compete with the likes of Samsung and Apple. The result of this stagnation was another disappointing quarterly report that saw a dramatic drop in HTC’s revenues compared to last year, and looking forward, it doesn’t look like anything is about to change.”

HTC would be hoping for a better showing in 2013 as it capitalizes on the investments in Magnet Systems and OnLine. Analysts view both these moves as HTC’s attempt to capitalize on the BYOD momentum in the enterprise. With RIM fading out fast from the enterprise segment, HTC would be vying for supremacy in this lucrative segment.

Though HTC has good results from sales of its “Butterfly” range in Japan (called the Droid DNA in the US), it’s still no match for Samsung’s might in the phablet segment. In a worrying sign, several analysts said 2013 may not be a turnaround year for HTC as its marketing and brand image lag far behind Apple and Samsung.

Peter Chou, CEO of HTC admitted the reasons for his company’s poor showing in an interview conducted with the Wall Street Journal when he said:

“Our competitors were too strong and very resourceful, pouring in lots of money into marketing. We haven’t done enough on the marketing front.”

Can HTC claw its way back to the #3 spot behind Apple and Samsung? I’m not so sure.

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Written by: Gaurav Kheterpal. Follow TheTelecomBlog.comby:RSS,TwitterFacebook, or YouTube.


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