HTC reports its first quarter of operating profit in the last year

July 3, 2014
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HTC CEO Peter Chou

HTC CEO Peter Chou

Credit: HTC

Finally, some reasons to smile for HTC. Following three consecutive quarters of operating losses, the Taiwanese company announced today a return to profit, largely thanks to cost cutting measures.

HTC forecasted it would return to profitability in Q2 2014, and the company managed to narrowly meet its guidance. Its NT$65.06 billion ($2.17 billion) revenue was close to the lower limit of the guidance, which was NT$65 billion to NT$70 billion.

The Q2 2014 revenue is almost double the revenue from Q1 2014, but is actually smaller than the NT$70.7 billion that HTC managed to muster in Q2 2013. However, HTC’s Q2 2014 profit of NT$2.26 billion ($75.5 million) is actually 80 percent more than the profit from the same quarter last year, despite smaller revenue. That’s the effect of cost cutting measures that the phone maker applied in the past months, including the externalization of some of its manufacturing activities.

HTC’s $75 million profit is a drop in the bucket compared to the billions that Samsung and Apple rake in every quarter, but it’s still an encouraging sign for the embattled company.

The problem is Q2 may be the high point of 2014, according to analysts cited by the WSJ, meaning that HTC may face further difficulties the next quarters.

While the One (M8) and the Desire 816 could remain the main revenue sources for HTC, the company has a few bright spots to look forward to in the next months. The OAne (E8), a plastic version of the M8, had a solid debut in China in late June, and a repeat performance in other markets is possible. HTC is also expected to launch an Android Wear smartwatch in August, and rumors suggest the company won the bid to make Google’s next Nexus tablet, due in Q4.

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