HTC Corporation Q1 Profit Down 98%, Despite HTC One Release

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HTC Corp (TPE:2498) today posted a 98 percent drop in its net profit from NT$85 million ($2.85 million) from NT$4.5 billion ($152 million) a year ago. Seems like the delay in the launch of HTC One proved to be a costly one for the handset maker. These numbers are the company’s lowest quarterly profit since 2004.

HTC Corporation Q1 Profit Down 98%, Despite HTC One Release

Revenue for the Taiwanese company fell to NT$42.8 billion from NT$67.8 billion. In its earnings report card, the company did not reveal the number of units it sold of HTC One in the first quarter. However, HTC said that for the second quarter it expects a jump in revenue to NT$70 billion.

According to an Asia-Pacific Markets analyst, HTC Corp (TPE:2498) sold 750,000 HTC Ones in April and will ship about 3.5 million units in the second quarter. HTC is expected to sell about 10 million devices in 2013. On the other hand, rival Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) is expected to sell 60 million units of the Samsung Galaxy S4.

Last week, many analysts including HSBC and Daiwa, upped their ratings of HTC Corp (TPE:2498), citing strong reviews of HTC One.

The Taiwanese firm blamed supply shortages for the delayed launch of HTC One, mainly the lack of available components for the handset’s “Ultrapixel” camera.

“I think that we have successfully launched the HTC One. We believe people are really getting our concept,” HTC CEO Peter Chou said on the call this morning.

“We’re focusing a lot in terms of marketing,” Mr. Chou said.

For the second quarter, the embattled handset maker expects a gross margin of 22 percent to 24 percent, compared to 27 percent a year earlier and 20.3 percent in the first quarter. The Taiwanese firm expects operating margin to be in the range of 1 percent to 3 percent, versus 0.1 percent in the first quarter and 9 percent a year earlier. Analysts also expect a better second quarter, estimating revenues of 67.2 billion New Taiwan dollars, which is 64 percent up from the first quarter and 23 percent down from a year earlier.

“We want to have initial strong momentum, but more importantly we want the momentum to carry over into the second half,” Mr. Chang said.

HTC Corp (TPE:2498), which was once the top seller of Android based smartphones in the U.S., has suffered a steep fall in the last three years. The company’s market share has reduced by more than half coupled with marketing missteps and product delays.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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