Business, Hardware

HTC lost 98% of the profit, HTC One Expected to Turn the Tide

Last month we reported the unaudited results for the Q1 2013, and now it is time for the complete results, which unfortunately remain in the sphere of?deficient. As noted earlier, shipping delays of the new flagship HTC One and poor overall performance in the last six quarters took their painful bite in Q1 results for the Taiwanese company.

Q1 net income went down from $152 million (2012) to $2.85 million (2013), which is a staggering 98% drop marking the lowest quarterly profit since 2004. Revenue went down as well, from NT$67.8 billion ($2.3 billion) to NT$42.8 billion ($1.45 billion). Gross margin and operating margin were 20.3% and 0.1%, respectively.

"Last year we thought we needed to inject some new excitement in HTC’s products, and there was an opportunity for us because everybody looks the same. (?) I think that we have successfully launched the HTC One. We believe people are really getting our concept. (?) Our goal is really to develop the HTC brand as a trustable, premier and excellent smartphone brand. That kind of brand awareness and preference is so important to us, as different suppliers are coming from everywhere and there’s no differentiation," HTC CEO Peter Chou said during the earnings call.

What definitely didn?t help the company is the fact Samsung played dirty and paid people to post malicious comments about products from the HTC Corp. (TPE:2498) and then there was the whole ordeal over the HAAC microphones, and company had to remove the part from their spec sheet as they prepare for another solution.

Analysts expect that the HTC One is the company?s last best chance to come back after the years of declines. Some even believe that the CEO pressure is overwhelmingly high at this point, and that the new person on the position could be the key. Peter Chou already stated that he will quit his position if the HTC One strategy fails.

While many argue that HTC did not do well because they ignored the ?removable battery? and ?microSD storage expansion? features that the competition offered (predominantly Samsung), it is nearly impossible to see it as simplified as that. HTC?s flagship is, according to many reviews, very well received and considered the very top of what Android platform has to offer for the moment being.

Taiwanese company expects to have NT$70bn ($2.37 billion) of revenue, and gross margin of 22-24% in second quarter of the 2013. In other words, their flagship HTC One is expected to have very strong sales and lift the second quarter revenues by nearly two-thirds.