HTC Corporation Misses Earnings Expectations

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HTC Corporation Misses Earnings Expectations
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HTC Corp (TPE:2498) reported its preliminary second quarter earnings, and the results were much weaker than expected. The company’s net income for the June quarter dropped to NT$1.25 billion ($42 million), an 83 percent decline from the same quarter a year ago. Sales were TW$70.7 billion, a 65 percent increase quarter over quarter but a 24 percent decline year over year.

HTC Corporation Misses Earnings Expectations

A consensus of 19 analysts polled by Bloomberg indicates that they were expecting the company to report net income of NT$$2.17 billion.

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HTC One Isn’t Enough

Analysts at Nomura have a reduce rating on shares of HTC Corp (TPE:2498). They and other analysts have noted that the majority of the company’s sales revolve around just a single handset: the HTC One. Sales of the company’s mid- to low-end handsets were much weaker than expected during the June quarter. They don’t believe that a single handset is enough, so Nomura analysts Anne Lee and Eason Hung are still cautious on the outlook for the second half of this year.

The HTC One was released in the U.S. in April, which was the same month when Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) released its Galaxy S4 handset. The Google Play version of the HTC One will be released next week, although it comes out at the same time as the Google Play version of the Galaxy S4, once again placing HTC Corp (TPE:2498) up against the powerhouse smartphone maker.

Outlook For HTC

Nomura analysts believe the company’s July sales will pick up sequentially, although they believe the company’s mid to low end models will begin to decelerate. HTC has been trying to rebuild its brand through a number of marketing initiatives, like the hiring of Robert Downey, Jr., who’s known for his role as Iron Man in the film series.

However, it remains to be seen whether these initiatives will actually work, especially since the company’s sales remain hyper-focused on a single handset. Analysts at Bank of America Merrill Lynch said earlier this week that execution and operation problems caused the company to miss its best opportunity to rebuild its brand premium.

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