HTC fourth-quarter profit below expectations

TAIPEI — Taiwanese smartphone maker HTC reported a worse than expected net fourth-quarter profit on Sunday, despite aggressive cost cutting and a one-time gain.

The company reported net profit of T$0.3 billion ($10 million), compared to a net loss of T$2.97 billion ($99.9 million) in the previous quarter and profit of T$1.01 billion ($34 million) in the same quarter of 2012.

The number highlights how quickly problems have piled up at a company that just over two years ago supplied one in every 10 smartphones sold around the world.

The company, which has lost nearly three-quarter of its market value in the last two years, is now worth about $4 billion, dwarfed by rivals like Apple and Samsung Electronics Co Ltd.

New management installed in the last quarter to tackle that slide must persuade customers the brand can still stand for stylish, feature-loaded phones, while keeping a lid on development costs.

Despite its latest flagship product, the HTC One, garnering rave reviews, the company’s global share of the smartphone market has declined to a mere 2.2 percent in the third quarter of 2013 from a peak of 10.3 percent in the third quarter of 2011, data from research firm Gartner show.

While the company’s recent “Here’s To Change” campaign has seen an advertising revamp featuring “Iron Man” star Robert Downey Jr., analysts remain skeptical about the firm’s ability to differentiate its brand image in a highly-saturated playing field.

The company has embarked on a cost-cutting campaign that includes buying its chips from cheaper vendors and outsourcing production. It also sold its stake in headphone brand Beats Electronics LLC, booking a one-time pre-tax profit of T$2.5 billion ($85 million), which would be recorded in the fourth quarter.

Shuttered factories, a wave of executive departures and top-level reshuffling are symptoms of what industry insiders see as the company’s biggest problem: connecting with consumers.

source: interaksyon.com

HTC turnaround prospects bleak as profit slides

TAIPEI — Taiwan’s HTC Corp said third-quarter revenue could fall as much as 30 percent from the previous three months, far worse than expected and underscoring deepening troubles for a smartphone maker with little prospect of an immediate turnaround.

A delayed launch for its much-hyped flagship phone, the HTC One, has only exacerbated inventory troubles and highlighted its lack of scale when compared to Samsung Electronics Co Ltd and Apple Inc at a time when the market for high-end phones is said to be approaching saturation.

HTC said it expects revenue this quarter of T$50 billion to T$60 billion ($1.7 billion to $2 billion), far below a market consensus of T$75.65 billion and its previous quarterly revenue of T$70.7 billion.

While the company said it expected an improvement in the fourth quarter, analysts were skeptical about a significant near-term reversal of fortunes.

“Negative across the board,” said Daniel Chang, an analyst at Macquarie Securities. “It doesn’t seem like the company has any strategy that can turn this around.”

HTC shares have fallen 44 percent for the year to date and are now trading at lows not seen since 2005.

It is not the only smartphone maker facing an uphill battle as growth for higher-end phones slows, with Nokia Oyj and BlackBerry Ltd also recently reporting weak results.

HTC’s earnings warning is only one disappointment of many over the last several quarters. While the HTC One’s sleek aluminium design has won plaudits, its launch was delayed by several months due to a shortage of camera components and the company has also been hurt by a wave of executive departures.

Its second-quarter net profit came in at just T$1.25 billion, far below forecasts and followed a record low in the first three months of the year. Its worldwide market share has tumbled to 2.5 percent, compared with a peak of 10.3 percent in the third quarter of 2011, according to research firm Gartner.

Alvin Kwock, an analyst at JPMorgan, said HTC’s small size meant it was unable to compete as Samsung cut prices for its Galaxy smartphones in many markets.

“Even a hero product can’t save them,” he said, adding that a partnership with another firm – a possibility CEO Peter Chou has said he would look at – was one of the few strong options open to HTC.

Although HTC is expected to soon launch the HTC One Mini, Samsung and Apple are also likely to announce their own new offerings later this year. A planned marketing blitz, which includes enlisting Robert Downey Jr. for a reported $12 million to star in its ad campaigns, is expected to weigh on profit margins.

source: interaksyon.com

Google coming out with two new Android phones

SAN FRANCISCO — Google revealed Thursday that it has two new sophisticated Android smartphones in the works, one of which will have the unprecedented distinction of being made in the United States.

An HTC One smartphone customized to be “Google’s take on Android” will make its US debut on June 26 at a price of $599, the head of Android, Chrome and Google Apps said at an AllThingsD conference in California.

“It’s a great device,” Google executive Sundar Pichai said during an on-stage interview.

Google Edition handsets by Taiwan-based HTC will be compatible with carriers AT&T and T-Mobile.

Pichai made the disclosure a day after Motorola Mobility head Dennis Woodside said on the same stage that the company’s was preparing to release its first smartphone since being bought by Google.

The smartphone would be called Moto X and be made in a facility near Fort Worth, Texas, Woodside said.

“It is the first smartphone that is going to be built in the United States,” Woodside said, noting that the plant would employ about 2,000 people by August.

“We think that it is going to allow us to innovate and iterate that much faster.”

Components for Motorola smartphones will come from Taiwan, South Korea, the United States and elsewhere with about 70 percent of the assembly done in Texas, Woodside said.

Moto X would set itself apart from other smartphones with advanced use of sensors such as gyroscopes and accelerometers to make devices adapt to the conditions or circumstances in which they are being used, Woodside said.

“It knows it is in my pocket or out of my pocket, and can anticipate use cases so it knows when I may want to take a picture and fires up the camera,” Woodside said, declining to show the smartphone on stage.

“Imagine you are in the car,” he continued. “The device will know, whether on or off, it is driving at 60 MPH (96 kilometers per hour) and it will act differently.”

Google makes its Android operating system for mobile devices available free to electronics manufacturers.

The company completed its $12.5 billion purchase of the Motorola unit — which makes smartphones and other devices — a year ago, eyeing both its mobile phone line, which uses Google’s Android platform, and some 17,000 valuable patents.

Motorola Mobility was created in 2011 when US-based Motorola Inc split the company into a mobile devices unit and a government and public safety division known as Motorola Solutions.

source: interaksyon.com