HTC revenues below target as competition rises

By Helen Ku  /  Staff reporter

Wed, Nov 07, 2012 - Page 13

Taiwanese smartphone maker HTC Corp (宏達電) yesterday reported lower-than-expected revenues for last month, the lowest since January, as the company struggled to overcome severe competition from Apple Inc and Samsung Electronics Co in the high-end smartphone market.

Last month, HTC posted a consolidated revenue of NT$17.21 billion (US$589.1 million), down 18.55 percent from NT$21.13 billion in September and 60.98 percent less than NT$44.11 billion a year ago.

“October’s result was in line with the company’s forecast made at an investors’ conference held a week ago,” a HTC public relations official said by telephone.

On Oct. 26, HTC chief financial officer Chang Chia-lin (張嘉臨) told investors that the company was projected to see a significant bounce-back in revenue this month, with most of its new products scheduled to go on sale soon.

During that conference call with investors and analysts, Chang also estimated that the company would achieve a target of NT$60 billion in revenue for the fourth quarter.

However, analysts cast doubts on HTC’s investment strategies.

“HTC’s recently introduced Windows Phone 8X and 8S smartphone models might not be able to help the company generate more than NT$42 billion in November and December, to reach its revenue target of NT$60 billion for the fourth quarter,” Horizon Securities’ (宏遠證券) assistant manager Cheng Kai-ming (鄭開明) said by telephone.

“Since Windows Phone 8X and 8S use an entirely different operating system [Windows 8] that does not allow the company to develop its own graphic user interface as Google Inc’s Android does, it’s hard to know whether HTC will find its niche in the Windows Phone’s market or not,” Cheng said.

Mega Investment Trust Corp (兆豐國際投信) senior analyst Kevin Hsu (許鈞雄) was also downbeat on HTC’s investment strategies.

“HTC has been hailing its flagship smartphone models [HTC One X series] for a long time, but its financial results did not prove that its products have helped them regain their market share,” Hsu said.

HTC has to lay out effective strategies that can help it to restore its momentum by slowing down its product launch speed, he said, adding that the market has been numb to HTC’s new products and is generally indifferent to them compared with Samsung’s Android-supported products.

“Unless HTC develops new models that can greatly differentiate themselves from Apple, Samsung, or even China’s Xiaomi Technology (小米科技), it’s unlikely it will achieve high gross margins again this quarter and next year,” he said.

“It’s time for HTC to take a thorough review of its business strategies,” Cheng said. “Perhaps someone should replace HTC chairwoman Cher Wang (王雪紅) to help the company. Otherwise, the situation will get worse and worse.”