April 7, 2012
HTC Profits Down 70% Versus Q1 2011
HTC, the top smartphone producer in Taiwan, reported its lowest first-quarter net profit figures since 2006, posting a decrease of 70% from Q1 2011 on Tuesday, according to various media outlets.
According to Forbes Staff Writer Brian Caulfield, the company reported a net income of $151 million (NT$4.46 billion) over the first three months of 2012, compared to $503 million (NT$14.83 billion) during the same period last year. During that time, revenue decreased 35% to $2.3 billion (NT$67.8 billion) from $3.5 billion (NT$104.2 billion) during the first quarter of 2011.
The results were not unexpected. CNET's Lance Whitney reported Friday that HTC had been expecting poor first quarter results, previously predicting that their sales would decrease by more than one-third due to what they referred to as "short term" problems such as decreasing demand for their older product offerings. Likewise, Caulfield added that in a February conference call, HTC Chief Financial Officer Winston Yung said that the telecom company "simply dropped the ball" on their fourth-quarter series of products.
As it currently stands, HTC was listed fifth among smartphone manufacturers in the US by comScore for the period between November and February -- trailing Samsung, LG, Apple, and Motorola and holding a share of just 6.3% of the American market as of two months ago.
However, earlier this week, HTC announced one of the smartphones they hope will reverse their recent fortunes: the EVO 4G LTE. According to PCMag.com's Chloe Albanesius, the EVO 4G LTE will be one of the first devices to support Sprint's long-term evolution network as well as the first EVO-branded LTE smartphone.
In addition to the EVO 4G LTE, HTC is planning to release additional smartphones, including new Google Nexus One series smartphones, an April 6 AFP report stated. Bonnie Chang, an analyst at Yuanta Securities, told the French news agency that the company's operations were "likely to turn around in the second quarter" as a result of the new product launch, though forthcoming offerings from Apple and Samsung mean that there are likely to be "uncertainties over its shipment momentum from the third quarter."
Likewise, Sanford Bernstein analyst Pierre Ferragu told Whitney that he anticipated "a significant recovery in sales" from the new HTC products. Ferragu added that over the long term, his firm believed that HTC "is a strong number 3 brand in smartphones“¦ The scale of Samsung and the success of Apple continue to represent challenges to the company's business model, but we believe HTC is in a strong position to recover from its low point."