Wed, May 07, 2014 - Page 13 News List

Profitability expected on One M8 sales, HTC says

TOP DRIVERS:HTC said the fast-selling new One M8 and its mid-tier Desire-series handsets are expected to drive sales this year, with the M8 outselling the M7 by far

By Helen Ku  /  Staff reporter, with CNA

An employee prepares a newly purchased HTC Corp One M8 smartphone for a customer’s inspection at one of the company’s stores in Taipei on Saturday.

Photo: Bloomberg

Smartphone vendor HTC Corp (宏達電) yesterday said the company is expected to turn profitable this quarter on the strong sales momentum of its latest flagship handset, the HTC One M8, which was launched in March.

The company’s sales last month rose 12.7 percent year-on-year to NT$22.07 billion (US$731.4 million), and HTC projects that sales for this quarter would increase by between 96.37 percent and 111.48 percent sequentially to a range of between NT$65 billion and NT$70 billion, HTC chief financial officer Chang Chia-lin (張嘉臨) said in a conference call.

That is only 0.01 percent lower than the NT$70.7 billion reported in the same period of last year, after the company started selling its flagship M7 handset.

Chang said gross margin would reach between 21.3 percent and 22 percent this quarter, compared with 21 percent last quarter and 23.2 percent a year earlier.

The company is expected to post earnings per share of between NT$2.21 and NT$3 this quarter, he said. HTC registered a net loss per share of NT$2.28 for last quarter.

“The M8 is selling better than the M7 from sell-in and sell-out perspectives,” Chang said.

The product is expected to outsell the M7, he added.

HTC has overhauled its internal coordination to avoid issues such as shipment delays or component shortages from happening to the company’s new products this year, he said.

Taoyuan-based HTC also pins hopes on its mid-tier Desire-series models, as it aims to make a turnaround from emerging markets including China and India, Chang said.

The company expects both the M8 and the Desire 816 to be its two top sales drivers through the second half of the year, he said.

“This is a good start for us and we are very excited about the future,” he added.

Despite efforts in cost control, HTC will continue spending on marketing this year to strengthen consumers’ brand awareness and ward off competition from Chinese rivals, Chang said.

Chang did not comment on HTC’s new product lines after being asked if the company plans to sell tablets or wearable devices in the near future.

HTC launched its first and so far only tablet product, the HTC Flyer, in February 2011. The tablet is equipped with a 7-inch display and powered by Google Inc’s Android operating system. However, sales of the product were officially discontinued in December that year.

However, Chang confirmed that some of HTC’s smartphones are being made by contract manufacturers, as reported in the Wall Street Journal on Monday.

“We have been outsourcing production. We think that once our assembly partners attain a manufacturing standard that meets our requirements, we can let them produce [our smartphones],” Chang said.

“The outsourced products have been well-received by consumers,” Chang added, but declined to identify the products or name the assemblers.

He said HTC’s outsourcing volume was not as high as 50 percent of its overall shipments, as reported in the Wall Street Journal, although he could not immediately give an estimate of the actual figure.

According to the Wall Street Journal report, Taiwan’s Compal Electronics Inc (仁寶) and China’s Wingtech Group (聞泰) have been assembling at least three of HTC’s new Desire mid-tier phones, starting in spring this year.

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