HTC Reports Dramatic Decline in Profits

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Taiwan-based HTC posted a record-breaking decrease in profits in the third quarter. The smartphone maker’s net income fell 79 percent compared to the previous year.

Tim Culpan with Bloomberg News reported , “Third-quarter net income slumped to NT$3.9 billion ($133 million), the Taoyuan, Taiwan-based company said in a statement today. That missed the NT$4.43 billion average of eight analysts’ estimates compiled by Bloomberg in the last 28 days.” He added, “Third-quarter revenue fell 48 percent to NT$70.2 billion, missing the NT$75 billion average of eight analysts’ estimates compiled by Bloomberg in the last 28 days.”

According to The Wall Street Journal, “HTC, which as recently as 2010 was the biggest smartphone maker using Google Inc.’s operating system by shipments, has seen its profit continuously decline since the last quarter of 2011 due to stiff competition from fast-rising Samsung, which overtook HTC to become the biggest vendor of Android devices in the U.S. in 2011.” The article also noted, “HTC’s latest quarterly profit is the lowest since 2006, when it first started selling cell phones under its own brand.”

In Forbes, Christopher Versace called the smartphone industry a “bloodbath.” He pointed out, “According to the Android web page, there are nearly a dozen smartphone vendors offering the devices running the Android OS – Samsung, HTC, Kyocera, LG, Huawei, ZTE, Motorola, Sharp, Sanyo and even a few models from Dell. With that number of vendors and each offering multiple models, product differentiation other than price becomes difficult.”

“In order to compete, and ensure it has a fresh smartphone line-up to compete with its rivals, HTC has released a number of new smartphones in the past couple of months, introducing the HTC 8X and 8S as its first Windows Phone 8 devices and the HTC One X+, a supercharged version of its critically-acclaimed HTC One X,” wrote Matt Brian in The Next Web. “HTC believes China is well positioned to become a key growth driver as its brand awareness grows and operator partnerships remain strong. It says Asia met expectation for growth since the One family launched in Q2 2012, with sales across North and South Asia in line with expectations.”