HTC profits from new One sales

COMMODITY::Despite its strong showing last quarter, HTC may have difficulty sustaining its growth momentum given rapid changes in the smartphone market

By Helen Ku  /  Staff reporter

Sat, Jul 06, 2013 - Page 13

Smartphone vendor HTC Corp (宏達電), which has been struggling to regain global market share lost to Samsung Electronics Co and Apple Inc, yesterday said net profit expanded 47 percent sequentially in the second quarter, driven by strong sales of the new One model.

The Taoyuan-based company said its net profit during the April-to-June period increased to NT$1.25 billion (US$41.61 million) from NT$85 million in the first quarter.

On an annual basis, however, net profit dropped 83.1 percent from NT$7.4 billion during the same quarter last year.

Boosted by strong sales of its new One flagship model, HTC’s revenue last quarter grew 65.18 percent to NT$70.7 billion — in line with the company’s guidance of NT$70 billion — from NT$42.8 billion in the previous quarter.

However, sales last quarter were down 23 percent from NT$91 billion during the same period last year.

“Unless HTC can come up with new innovative wearable products like iWatch or Google Glass, the company will be hard pressed to make a comeback because the smartphone market is near saturation,” Mega Investment Trust Co (兆豐國際投信) analyst Kevin Hsu (許鈞雄) said by telephone yesterday.

Hsu said HTC is betting big on its investment in marketing while pushing sales of the new One, which could sustain its momentum for another month.

Citing HTC’s sales last month, which fell 23.88 percent month-on-month and 26.43 percent year-on-year to NT$22.07 billion, Hsu said that HTC’s new One flagship smartphone is well-designed but facing the same problem as Samsung’s Galaxy S4 smartphone, which could probably sustain its sales momentum for another two months — one month more than HTC’s new One.

“Even Samsung is experiencing difficulties in sustaining the sales growth momentum for the S4. HTC should realize that the smartphone product cycle is getting shorter,” Hsu said.

“High-end smartphones have become a commodity that everyone can own now,” Hsu said.

Hsu lauded HTC’s aggressive marketing approach to rebuild the company’s brand, but said it could weigh on the company’s profitability in the third and fourth quarter of the year.

HTC earlier this year said it planned to double its marketing expense this year to heavily promote its brand and products.

HTC shares closed up 1 percent at NT$203 in Taipei trading, underperforming the broader market, which gained 1.37 percent, Taiwan Stock Exchange data showed.