April 8, 2013
Delays In Production Hit HTC’s Bottom Line
Michael Harper for redOrbit.com — Your Universe Online
The smartphone wars may be a mostly two horse race at this point, but one other manufacturer, HTC, hasn´t yet given up the fight. Not only have they been able to land an exclusive with Facebook – building the HTC First phone, the first phone with Facebook Home – they´ve also built an Android superphone which many gadget reviewers have ranked higher than any phone from Samsung or Apple.Unfortunately, it´s that Best of Android superphone, the One, which has been blamed for HTC´s record low profits during their last quarter. The Taiwanese company saw their profit fall by over 91 percent over the last quarter, according to the Wall Street Journal, earning only $2.8 million in unaudited net income.
To put it in another perspective, this was the lowest quarterly earnings report posted by HTC since 2006. While the company seems to be hitting the pavement hard with their new One flagship, issues in the manufacturing process kept this phone out of customers´ hands during this quarter.
Analysts may have been prepared for lower numbers due to the tardy One, but HTC even missed this numbers by a long shot. According to Bloomberg, a total of 19 analysts had estimated the company would report a profit of NT$600 million, or $19.98 million.
According to Lu Chia- lin, an analyst at Daiwa Securities in Taiwan, these delays had a serious effect on sales, but should one day help the struggling company.
“HTC One´s production shortage means lost sales in the first quarter will be lost forever, not just delayed,” said Chia-lin, speaking to Bloomberg.
“HTC One has a good design, and they still have lead time ahead of the S4, so revenue has a good chance to rebound this quarter.”
The company is betting big on the One to help them compete against Apple´s iPhone and Samsung´s Galaxy phones, both of which have been leading the pack. Despite the in-house excitement for the One, analysts are still unsure about the company´s future more often advising their investors to sell the stock rather than buy it.
These aren´t the first problems HTC has had to overcome in recent years in their battle against the Big Two. The Taiwanese company has seen their global market share slip from 8.8 percent in 2011 to 4.2 percent in 2012. Additionally, the One´s predecessor – the One X – had difficulty reaching American shores due to a patent suit by Apple.
As a result of this suit, the International Trade Commission (ITC) found that Android´s messaging app and browser, the same app and browser used by the One X, had infringed on some of Apple´s patents. As such, the ITC barred all imports of these phones into the US.
It wasn´t until many months later than Apple and HTC would reach an agreement out of court and end their on-going litigation.
The HTC One will soon be joined by the HTC First, the first phone to have Facebook´s “family of apps” natively baked into an Android handset. This, claims HTC chief marketing officer Benjamin Ho will bring more customers to their brand and hopefully boost revenues.
"There is value for HTC in getting its phones in as many consumer hands as possible," said Ho in a statement to the Wall Street Journal.
"In addition to our own highly-anticipated devices, like the new HTC One, this is a way to do that."