HTC forecasts recovery: but is the One the cure-all or just a bandaid?

May 2, 2013

    htc one Credit: HTC

    No one can deny that it’s been a tough year for HTC; dwindling profits, component shortages, and a slump in market share are leading many to wonder about the future of the Taiwanese manufacturer. It seems like the company’s success could well be tied to the fate of the HTC One, so I’m sure that HTC’s CEO Peter Chou was happy to read the positive reviews after suggesting that he’ll step down if the HTC One flops. But even so, there is still an air of do or die surrounding the company.

    In the meantime smartphone rivals LG and Samsung have both had excellent starts to the year, but HTC’s first quarter financial results were poor, very poor. The company announced a record low for its profits just a few weeks ago, only managing to scrape together $2.8 million compared with $470 million over the same time period in 2012.

    Surprising though, it seems that HTC is expecting a substantial turn around come the second quarter of the year, however the key word to note there is “expecting”. At an earnings call earlier today HTC stated that it has a much healthier outlook for Q2 2013. HTC predicts a huge 64.6% jump in revenue back up to around $2.4 billion (NT$70billion), compared to the $1.45 billion (NT$42.8 billion) collected in the previous quarter.

    Providing these forecasts are accurate, this would put HTC back on par with its performance at the start of last year. But is it going to be enough to save the struggling company?

    Of course HTC will spin this as a huge turn around; Peter Chou has already stated that the company will be fine in terms of cash flow, and that it can continue to support both Android and Windows Phone hardware in the future. Supply woes are now set to be a thing of the past, so everything seems bonny, right?

    Well let’s look at something more concrete, the figures.

    HTC Quarterly Revenue

    A quick glance at the quarter on quarter revenue and you can see a clear down slope since the summer of 2011, but HTC’s forecast of $NT70 billion in revenue for the next quarter would go some way to break this trend. But no matter how much HTC would like to convince us otherwise, it’s certainly not enough to confirm a turnaround for the company, after all Q2 2012 saw a similar lift before continuing down. The Q2 forecast on it’s own in very healthy, but if it’s the peak revenue generated by HTC this year then things won’t look so good come the fourth quarter.

    In all honesty, having looked more closely at the figures myself, I’m highly doubtful that the HTC One alone will be enough to restore the company to its previous heights. More likely, it’s a temporary Band-Aid over a deeper wound.

    htc one vs sony xperia z one performance aa

    The HTC One is a great handset, but can it be relied on solely to turn HTC’s performance around?

    What makes Samsung so strong, and what is also helping other competitors like LG and Sony, is that the company has a wide array of decent handsets to fit a range of budgets. HTC does not, and there seems to be very little interest in its other new projects like the Facebook Home powered First.

    Banking on a single handset is a precarious position to be in, and even though the HTC One is looking to be a successful smartphone, it’s all a little too late. The figures don’t lie; HTC has clearly been on a downward slope for almost two years and it’s going to take more than a single return to 2012 revenue levels to claim that the company is out of the woods.

    Having said that, HTC certainly isn’t down and out, it’s still turning a profit and the forecast Q2 results should give the company an opportunity to invest in new developments.

    But it’s going to be a long climb back to the top.

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    Comments

    • Kevin J

      According to all the tech sites, every phone manufacturer is doomed! BS, LG and Sony has a long way to go before people trust them yet this writer makes it as though they don’t have any problems.

      • http://riteshtripathy.wordpress.com/ Ritesh

        Sony are still doing pathetic while LG sure has posted some very good results this quarter (mostly due to the Nexus 4 I guess). People still have zero trust in LG as far as software support goes. Sony are good with software but always a notch behind the curve in hardware. Neither are in the green as this writer seems to suggest though.

        • cs098

          Sony and lg are doing better than htc, they are actually the third and fourth top selling oems behind Samsung and apple. IDK about lg but Sony sold 4.4 million xperia z in about a month, not the best, but definitely not pathetic.

    • Jared Persinger

      Htc deserves a lot of credit for the one, in my opinion all companies need a humbling after they make mistake after mistake (htc was getting really bad at software support their for a while and they also released too many phones and the all had small batteries) but the one is really nice and I would recommend it to almost anyone

    • Arsenal™

      without sd cards and removable batteries, its gonna be tough

      even though i dont use em, most people do

      • amine ELouakil

        It’s quite the opposite, the average consumers removes his battery or SD once or twice at most during the entire life of the phone, the average consumer that is, on the other hand the techy people would use their SD cards more often as for battery, only some rare powerusers that care about such

        • aldric

          it’s not about power user or average consumer.

          it’s about CHOICE and FREEDOM, that’s the real meaning of Android.

          if I can’t have my storage of choice in android phone, what’s the point of having one ?

          if I want a phone with non-removable battery and no sdcard slots, I’d better go with iPhone. it also has better battery life than most htc.

          • spg210

            The point in having one? Uh…you can make phone calls, check and send emails and texts and surf the web, as well as other features.

          • amine ELouakil

            Of course it’s about the average user who buys phones in mass.

            FREEDOM and CHOICE you still have them, which is buy another phone if the One is not the One for you.

        • Tony Willis

          its quite the opposite…people like removable batteries and sd card slots. Its why samsung keeps outselling everyone…Apple can get away with it because they have apple stores.HTC does not….atleast not everywhere they sell their devices

          • amine ELouakil

            It’s not quite the opposite at all, just ask around you.
            Outselling anyway? Last I check the iPhone is the most selled smartphone on the planet and have neither a removable battery nor an SD.
            If Samsung is outselling their Android counterpart is due to their 11billion $ Marketing budget which is more than the whole Android OEMs + Apples budget combined.

            What does Apple store has to do with SD and removable batteries please explane to me.

      • http://riteshtripathy.wordpress.com/ Ritesh

        Nope. Neither of those things matter in the least to a majority of people. I’m a power user and modder and those things do not bother me at all. All I need is at least 32 GB onboard and a decent battery that outlasts a work day with general usage.

        • Arsenal™

          well most people ive met disagree

          anyways, different people have different opinions

          • spg210

            Right…Most people YOU’VE met, which I’m sure pales in comparison to “most” people.

            • Tony Willis

              and most people do like sd card and removable battery….don’t really feel like having to replace the whole device when the battery goes up….if the battery goes up….plus lots of people like the extra storage option for videos photos, music, etc and because it’s open and that is what android is..

            • http://riteshtripathy.wordpress.com/ Ritesh

              Nope. I’ve said this a thousand times – majority of buyers do not even care about a microSD or removable battery. There are dozens of people I know who have never removed their battery a second time after they put their SIM card in when they bought the device. Many haven’t even put a SD card in! 16GB is enough for a lot of people. And I’ve seen no one in real life who said 32 GB is not more than enough storage. These OEMs aren’t dumb. They have market research numbers and buyer preference data. What affects sales is marketing and after-sales support. That’s where Apple and Samsung have the market cornered. iPhone – no SD or removable battery – sells metric tons. Galaxy S devices – SD and removable battery – sells metric tons. SD and removable battery do not make any difference to a majority of buyers.
              Btw, when the battery goes dud (which rarely happens in the real world lifetime of a smartphone these days), you just take it to the service center and they replace the battery in a few mins. As simple as that. You don’t have to replace the whole device. The battery is not moulded into the device. its still a separate battery, only its not user accessible.

    • HTC_FTW

      I’m really sick of all the negativity from this snarky crappy web site. Sit behind your little blogger keyboard and write speculation and conjecture and pure bs about real entrepreneurs and risk takers. Pukes, the lot of you.

      • http://www.facebook.com/eatmorecake Dusan Doroski

        And fanboys are so much better.

      • cycad007

        HTC made a great phone with the One. I really wish Google would select HTC to make the next Nexus phone. I was seriously disappointed with the battery life and build quality of the Nexus 4.

        • lil bit

          Google will never work with HTC again, HTC cannot be trusted and are experts in hiding from manufacturing defects, for sure Google had enough headaches in the past dealing with HTC.

          We already see the start of HTCs usual behavior now with the defect on the capacitive buttons on One, its a defect that will never be fixed on the already manufactured phones, and they will never replace the defective phones. This is how HTC roll, and this is why HTC been on a 2 year downwards slope, they pissed off too many customers and those customers will never trust HTC again.

          HTC should go bankrupt and then bought up by a serious phone manufacturer, like ZTE. China brands may not command great respect but easily beats HTC in quality and support.

      • spg210

        HTC needs its most rabid fanbois to spend less time being butthurt in message boards and more time in mobile stores buying more HTC Ones. How many lines do you have available to add Ones to?

    • http://www.facebook.com/unethical.hacker Adie

      I don’t understand why a single device CAN’T change the financial position of a company when companies like Apple can manage to get so much revenue from their limited set of smartphone line up.

      • http://riteshtripathy.wordpress.com/ Ritesh

        It sure can IF someone manages to sell as many as Apple (with similar profit margins).

        • http://www.facebook.com/unethical.hacker Adie

          HTC needs to market their product well and also the stock should be readily available in the stores as soon as the marketing program launches but that never happens.

      • technology

        The problem is that HTC are not able to provide many devices like Samsung or Apple. Even now with much less stock than the S4 and iphone 5 stocks HTC one sales don’t come to the devices they shipped (about 2 million devices).
        So no, HTC can’t change the financial position with a single device.

      • Tony Willis

        It was not just the Iphone that sold the iphone. It was their ecosystem and support that mass sold the iPhone. What else does htc have? They need to stop playing stupid and start making tablets again and maybe a laptop or too.And also get some stores out their so consumers can at-least do more with their devices.I can clearly see why the one may not do it fully for htc.They will be fine but they have along way to go. Plus the fact that they just did away with the “evo” line, the “sensation” line,the “hero” line(i know they said the droid DNA but how does that count as a hero?)etc for “htc one”(Those brands were phones customers were already familiar with).It’s like they forgot their glory day’s were HTC phones were bigger and more stylish that Samsung’s.(HTC EVO 4G and HTC sensation)It all went down hilll when they started trying to be fancy with their phones(2011, EVO 3D “Ugliest bezel ring ever”)If htc was quietly brilliant, they should just wait for Samsung to announce phones and then ONE up them..Its what Samsung does all the time and the prime example of it all is the GS2. When that phone came out,(after everything else) it was bigger, faster and better than most phones out their. HTC should stop acting crazy and release a 5.5 ,5, etc inch phone and give us back removable SD card and battery….People would go crazy for a 5 inch or even 5.5 inch HTC one with removable battery and sd slot.They need to stop thinking about what they want and think about what the people would want/ like.Give us choice…its what Samsung is doing.Its HTC that’s holding themselves back. I would love to get the one but i love removable battery and SD card slot to much..plus people like big screens……. if they want to sell like they previously did then they have to except that people really do like bigger phones.They need to target and expand their audience. IMHO removable battery and SD card slot is a main factor that differentiates android phones from iphones. That freedom is what i like.I hope they can bring those older features back..Their should be a 5 musts for android…and removable battery and SD card should be one of them.

    • Marcus Harmon

      The HTC One proves the company has what it takes to succeed. The only question: Can it continuously produce great devices?

    • Carl

      I think is as simple as this, with great tech support and following up on the software side (I mean where why isn’t the One running 4.2?!) they might be able to do something with this. The reason why people pick android instead of iPhone is the possibility to customize, why do HTC then insist on keeping all the software locked up tight and update their phones slower than it takes for paint ot dry?

      I am an iPhone use but will get the One as my next phone. If it has 4.2 that is, seeing I have been used to have it on my nexus 7 since December!

      • http://riteshtripathy.wordpress.com/ Ritesh

        Sense 5.1 (4.2.2) has already leaked out on the Butterfly. That must give you an indication about 4.2 on the One. :)

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