Fri, Feb 07, 2014 - Page 13 News List

HTC predicts turnaround with new devices

NEW YORK INTERVIEW:Top executives said a wearable device will be available by Christmas, but declined to confirm if they were going to spend more on marketing

Bloomberg

HTC Corp (宏達電) said an updated version of the One smartphone, its first wearable device and a renewed focus on marketing will help turn around the company this year after two straight annual declines in revenue.

“We feel positive and optimistic about 2014 when compared to 2013,” Chang Chialin (張嘉臨), chief financial officer and head of global sales for the Taoyuan-based company, said in an interview on Wednesday at Bloomberg’s headquarters in New York.

He declined to provide a forecast ahead of an investor conference call scheduled for Monday.

Once the leading smartphone maker in the US, HTC’s sales dropped 30 percent last year as product delays and a shrinking marketing budget caused it to lose market share to LG Electronics Inc and Lenovo Group Ltd.

A wearable device will be available by this year’s Christmas shopping season after years of development and technical challenges, HTC chairman Cher Wang (王雪紅) said.

“Many years ago, we started looking at smartwatches and wearables, but we believe that we really have to solve the battery problems and the LCD light problems,” she said in the interview. “These are customer-centric problems.”

HTC shares fell 53 percent last year, their third annual decline, while revenue dropped to NT$203.4 billion (US$6.7 billion) and it reported its first annual net loss. Its sales and marketing budget dropped 20 percent in 2012, and was 9 percent lower for the year through Sept. 30, according to data compiled by Bloomberg.

The firm’s stock climbed as much as 1.6 percent in Taipei yesterday after Bloomberg News reported the executives’ comments, and closed 0.4 percent higher at NT$129.50, its first increase in six trading sessions.

Wang, who cofounded the company with chief executive officer Peter Chou (周永明) and former chief executive H.T. Cho (卓火土) in 1997, said HTC plans to renew its marketing efforts after last year’s well-received One smartphone failed to boost revenue.

“To tell the truth, we never think marketing is that important — this is really not very good,” Wang said.

The executives declined to say whether HTC’s marketing budget would rise this year after the company last year signed actor Robert Downey Jr for US$12 million to represent it.

“It’s really not only the budget increase, it’s the way how you spend the money. Is it smart?” Wang said. “There’s a lot of ways to reach the audience right now.”

An increase in revenue this year would be HTC’s first since a 67 percent climb in 2011. The company is expected to post a 5 percent drop in sales to NT$193 billion according to the average of 29 analysts estimates compiled by Bloomberg.

Net loss will narrow to NT$795 million from NT$1.3 billion last year, the estimates showed.

“It’s a good thing that they’re recognizing the importance of marketing,” Dennis Chan (詹宗勳), who has a sell rating on the stock at Yuanta Financial Holding Co (元大金控) in Taipei, said by telephone.

“I need to be hearing some good pre-order volume for their flagship handset, which I am not hearing yet” before upgrading the stock, he said.

The company will release its next HTC One model next month, featuring a twin-sensor rear camera and a larger screen, Bloomberg News reported last month, citing a person with direct knowledge of the plans.

A wider array of products this year will help HTC find consumers in more segments of the market after it relied on its One and Desire series for most of its revenue last year.

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