HTC Reports First Time Loss

By Naveen Athrappully, Epoch Times
October 9, 2013 Last Updated: October 9, 2013

Taiwanese phone maker HTC has published its first loss since going public in 2002. Once touted as the fastest growing tech company by Businessweek and 31st Most Innovative Company in the world by FastCompany, HTC has recently reported a net loss of 2.97 billion Taiwan Dollars (US$101 million) in the three months to September. This was from total revenue of NT 47.05 billion (US$1.6 billion) while the operating losses ran into NT $3.50 billion ($119 million).

Samsung, its main competitor, is meanwhile eating up market share and has reported record profits for the same period. Like Blackberry and Nokia, new product launches have had little effect in turning the tides for the phone company. The revenue from their flagship model, the HTC One, was much lower than company expectations.

HTC shares have fallen more than half its value during the past year, with analysts seeing red for the immediate future. They have been hit by several corporate tribulations such as internal turmoil from allegations of senior designers leaking company secrets, staff departures, and problems in the supply chain.

According to a Reuters report, HTC has not made any plans yet for selling company shares like Nokia or Blackberry, which is currently considering suitors. 

“Fundamentally there are a lot of things that need to be fixed,” said Laura Chen at BNP Paribas to Reuters. “No sign of recovery anytime soon.”

This has brought up possibilities of mergers with Chinese Telecom manufacturers. Huawei, one of the mainland’s telecom giants, has declined any interest in HTC after JPMorgan suggested a merging of the two companies.

However, according to HTC chairwoman and cofounder Cher Wang, the low share price is not a matter of concern and has ruled out all rumors of selling.

Competition from industry behemoths Apple and Samsung, whose advertising budgets cannot be matched by other manufacturers, and the increasing costs of components, have cut down market share and profits of the company that used to sell one in every ten phones worldwide. 

There is speculation of an upcoming launch of HTC One Max, a phablet (smartphones with displays larger than 5 inches) in competition with Samsung’s Galaxy Note 3. 

In July, HTC CEO Peter Chou had said that the company plans to launch and market more mid-segment low-cost smartphones in China.

Many wrong decisions later, from failed marketing campaigns to botched software and hardware partnerships, HTC is finding the sand quickly shifting from beneath their feet. Making good phones is not enough, that’s just one part of the business.