The Taiwanese company, formerly one of the biggest selling Google Android smartphone makers, has fallen on tough times. HTC reported revenue of TWD$91bn (£1.95bn) and net profit of TWD$7.4bn (£158.8 million) for the quarter to June 30. This is a big drop off from this time last year, when the company saw TWD$124.4bn in revenue and profits of TWD$17.5, a drop of 27% and 58% respectively.
Customers have increasingly move toward Samsung’s popular Galaxy S devices at the high end, and new entrants such as Chinese budget smartphone manufacturer ZTE have chewed away at market share in the low end.
Samsung shipped 50.2 million smartphones in the second quarter of 2012, compared to 26 million for Apple. HTC has fallen behind the troubled Nokia selling just 8.8 million units to Nokia’s 10.2. ZTE has grown 300% year on year to sell 8 million smartphones in the period.
HTC’s latest high end model, the HTC One X, saw favourable reviews, but failed to catch on with buyers in Europe and the US. It featured a tie-up with headphone manufacturer Beats Audio, which saw no traction, and issues over its battery life saw it wane in popularity in the face of the Samsung Galaxy S3, which launched in May to much fanfare.
The company has preserved its gross margins at 27%, compared to 28.76% the year prior. Its operating margins have similarly fallen from 15.47% in Q2 2011 to just 9% currently. HTC opted to protect its margins rather than pursuing price cuts, wary of being seen as a ‘cheap’ smartphone maker. Despite lacklustre sales, the One X still sells for the relatively high £419.95 at Carphone Warehouse.
HTC isn’t picking things to get much better across the rest of 2012, projecting revenues to fall by a further 10-20%, to between TWD$70-80bn. It is also predicting gross margins to fall to 25%, and operating margins to 7%.
The company has long been attached to Facebook phone rumours, despite Facebook CEO Zuckerberg’s denials. Historically, it partnered with Facebook to add a Facebook button to its devices, which, again failed to find traction.
