HTC’s profits hit a record low, component delays are to blame

April 8, 2013
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Last Monday many financial analysts were already anticipating that HTC would miss its profit forecasts for the first quarter of this year, due mainly to delays caused by component shortages with the new HTC One. Today HTC has announced its quarterly earnings report for the first part of the 2013, and unfortunately the results have fallen short of even the most pessimistic predictions.

The company announced a worse than expected quarterly revenue of just NT$42.8 billion (New Taiwan dollars), which works out at approximately $1.4 billion USD. This is considerably less than the NT$50 billion-NT$60 billion target given by HTC back in February, and even falls short of the downgraded forecast of NT$45 billion issued by JP Morgan Chase at the beginning of the month.

Over the past three months HTC has only managed to turn a profit of NT$85 million, which equates to roughly $2.8 million. A pretty paltry margin based on the company’s overhead costs. For the sake of comparison, in the first quarter of 2012 HTC managed a much healthier $470 million profit from a total revenue of $2.2 billion.

HTC is clearly under-performing and has been for a quite a while due to poor sales and a dwindling share of the smartphone market. The company’s stock is currently trading 70 percent lower than the highs set two years ago. As already mentioned, the cause for the company’s more recent performance worries is due to component shortages with parts for the new HTC One, resulting in the One being released in just three countries by the end of March instead of the 80 countries which were hoped for.

The next quarter’s performance report is no-doubt going to be key for HTC. By then the HTC One will be fully available in most major markets, so there will be more excuses for poor sales figures. Then there’s the newly announced HTC First, complete with Facebook Home launcher, which is a bit more of a risk but could pay dividends if smartphone users are as obsessed with Facebook as Mark Zuckerberg thinks they are.

I personally hope that HTC can turn things around, after all the company has given us some of the best Android handsets over the years and the HTC One is a top quality piece of technology. But the smartphone market is fiercely competitive and HTC will certainly be worried about the pending release of the Samsung Galaxy S4, which will be in direct competition with its own flagship handset.

There’s no doubt that this is shaping up to be a tough year for HTC.

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