HTC financials

Poorest quarter yet for the Taiwanese manufacturer

HTC's financial woes continue, with today's unaudited results for the first quarter of 2013 painting a picture of a barely profitable company. Net income after tax slipped to just NT$85 million ($2.83 million), down from NT$4.464 billion ($150 million) it earned during the first quarter of 2012.

HTC's total revenues for Q1 2013 were NT$42.8 billion ($1.42 billion). Unaudited operating income was NT$43 million ($1.43 million), while net income before tax was NT$103 million ($3.43 million). Unaudited earnings per share (EPS) were NT$0.10 ($0.003).

Today's announcement follows delays in getting the new HTC One handset out onto the market. Camera component shortages led to the UK, German and Taiwanese launches slipping from mid-to-late March, while wider availability -- including the crucial U.S. launch -- was pushed back to mid-April. HTC's pinning its hopes for revival on its new high-end smartphone, with reports suggesting CEO Peter Chou may have told execs he'll resign if the device isn't a success.

We'd argue that even if the HTC One had launched on time, the difference to HTC's balance sheet wouldn't have been fully reflected until later into the second quarter. But with Samsung's Galaxy S4 due in multiple countries by late April, every extra day on store shelves is crucial, and the delays represent more bad news for a company that's been in decline for some time now.

HTC will be hoping that the next round of financials show the turnaround it's been expecting off the back of its new handset. As we said in our HTC One review, the phone itself is certainly up to the task. Now it's up to HTC's marketers to get the message out to smartphone buyers.

Source: HTC

 
There are 34 comments

kxs783kms says:

Sad. If they do go under someday, we'll be losing some quality hardware. Too bad they don't understand that bigger batteries, removable battery doors and expandable storage(micro sdcard slot) is all that's stopping them from being the top manufacturer again. Here's to hoping their marketing plan works.

jasonaward says:

The reality is that 99% of people don't care about "bigger batteries, removable battery doors and expandable storage". Marketing and popularity is the only thing that sways those 99% of people. Just look at Apple and their success with the iPhone which has none of those things.

Targon says:

People do care about these things, and being able to get through a day with your phone is a critical thing. The removable battery isn't as critical, but there is a segment of the market that cares. Here's the thing, if a given feature, or lack of it would keep ten percent of your prospective market from buying the device, that alone may not be a make or break thing, but when you have competition that has that feature, and you have a LOT of features being thrown around, it makes for a really competitive market that CAN add up to a make or break issue.

So, Android 4.2.2 vs. 4.1.2, being able to swap the battery or SIM card, software features, and build quality. The HTC One has build quality on its side, but the Galaxy S4 has the other three things as advantages. Then you have all the software features...what does the One offer in terms of software compared to the Samsung? Quality of software counts, not just bullet items, but a SLIGHT advantage to one or another on a given feature won't matter much if there are bigger elements.

There is the other issue...after 2-3 years, the battery WILL need to be replaced to get a full day of use out of(if it even starts off capable of lasting a full day), and not being able to swap the battery will affect those who tend to keep their phones for a longer period of time. Enthusiasts tend to replace phones every 12-18 months, but many people DO keep their older phones, or pass them down.

jasonaward says:

I think you severely overestimate what the average consumer looks for. They look for what the sales rep pushes them toward, what looks best, and what they *perceive* to be the product they want based on qualities that few of them could concretely define.

And I think you're severely overestimating the size of the enthusiast market. I'm pretty confident that it's much less than 10%.

heathroi says:

But if a product has something and another doesn't, that is seen as a feature that the second doesn't have, even thought the customer mightn't use it all that much if ever, its something they could use, flexibility wise as opposed to being told whats goods for them by the manufacturer.

Targon says:

I didn't say what the size of the enthusiast market is, but there IS the function of what features a device has, and then you have people doing a comparison. Camera, 13MP is better than 8MP is better than 5MP to most people, and it is a rare case where you see a lower MP count on the camera does offer a better quality image.

Now, I also mentioned that there is a huge difference between the market here in the USA compared to Europe and the rest of the world since you have contract prices here, and most of the world has people just buying the phone at full price, off contract. That means that you DO see a lot more feature comparisons to make sure a product is worth the money for THEM. There may be a "what the sales rep pushes" issue, but when you are looking at paying $650 out of pocket or more for a phone, you don't upgrade every year, or you will be more careful when you do, just so you will hopefully get a better resale value on your old phone when you DO upgrade.

Again, if a removable battery cuts 10 percent of prospective customers, camera being 5MP or 8MP vs. 13MP, and so on, if it adds up, you end up losing out to competition that has higher end specs, even if it doesn't matter as much.

speculatrix says:

People talk to their local enthusiast and ask for advice. People come to me, even those who are tech savvy to ask my opinions as they want to avoid making a bad choice.
Various of my friends have bought HTC phones and have been happy to live with limits of fixed battery and no card slot.. others have not.
Some have gone for iphone but at least haven't done so without knowing about vendor lock-in.

MarkSeven says:

Not true. The BIGGEST complaint I get out of all the HTC users I've come across is that the phone dies too fast, in which I reply that I always keep a spare battery. Can't do that no more with these new HTC phones and when ur on the move u can't be stuck to a plug on the wall.

bp3dots says:

They could have solved that problem with a RAZR MAXX HD size battery. Super long life, and non removeable.

npco543 says:

While people might not specifically care about each of those things in isolation, when comparing two phones side-by-side, they're far more likely to choose the phone with more features and/or higher specs:

Android version:
HTC One - 4.1.2
Samsung S4 - 4.2.2

CPU:
HTC One - 1.7Ghz Quad
Samsung S4 - 1.9Ghz Quad

Camera:
HTC One - 4 megapixel
Samsung S4 - 13 megapixel

SD Card Slot:
HTC One - no
Samsung S4 - yes

Removable Battery:
HTC One - no
Samsung S4 - yes

Battery Capacity:
HTC One - 2300mah
Samsung S4 - 2600mah

WiFi:
HTC One - b/g/n
Samsung S4 - b/g/n/ac

At every point, Samsung beats HTC. You can argue the differences are minimal, and you'd be right, but taken collectively, they put HTC at a disadvantage. And for those who DO primarily care about removable batteries and SD cards, HTC's stubbornness on this issue has been seriously off-putting. I've had both Samsung and HTC phones, and HTC had always been my favorite BY FAR. But their stubbornness as of late, and their pitiful track record when it comes to updating phones has ruined their reputation in my eyes.

Hate to say it, but at this point, they can go bankrupt for all I care. I was shocked when the One was just more of the same. I really thought they'd at least give in on the battery issue. Google might be pushing for the ditching of SD cards, and the One at least has decent on-board storage, but the battery is all HTC. It might be a small thing that only really matters to a small number of people, but it would have been a sign that they're actually listening to their (potential) customers. Instead, as someone else said, they've remained tone-def.

bos1 says:

Exactly right. Any company that believes they can market their way out of the gutter is doomed. To have any chance of survival they need to fix the problems that put them in the gutter in the first place: Lack of expandable memory (yes, people want that. many people. the assertion that it doesn't matter is not supported by facts or by sales figures), a reputation for woeful battery life, and their relentless prioritization of form over function.

DWR_31 says:

If you walk into any carrier store and look for a HTC phone you're only likely to find one, while if you do the same with Samsung phones you'll find at least three in different teirs.
Would you be more likely to buy a device in a store where there is only one device of that manufacturer when the other manufacturers have more presence in stores?

mwara244 says:

Sounds like they jumped the gun on the release of the HTC One Press conference revealing knowing they wouldn't even have them manufactured for public release. Only press model phones have gone out. Now it seems their suppliers won't send them the materials to make their phones, sounds like they owe their suppliers money and they won't send supplies till they pay the previous balance.

If the S4 releases before the the One they aren't going to sell as well. Had they had the phones already manufactured and ready to go the time of the PR event they could of had a jump on Samsung and word of mouth from people showing off their new phones to their friends. But HTC has just shot themselves in the foot.

I wonder how long it will take before bigger companies try to buy out HTC, apple samsung and Google will probably try to buy them if this endeavor fails.

odd1ne says:

Its a real shame to see them fall after just a couple of years as being the phone to have. It's going to be hard for them to fight with google, samsung and apple just because they have so much money to back them. I think they should stop trying to fight with them and make a killer phone but without the premium price tag.

Gekko says:

the responsibility lies with the tone deaf CEO. shareholders are getting killed. if he had any shame he'd resign or perform seppuku. the "new" products and running around with Zuck on stage will not save them. my prediction? more pain.

do you hear me Chou????????????

http://www.youtube.com/watch?v=hcO4MMzdYE8

lol you people are funny. HTC isn't falling or going anywhere. These results do not include HTC One sales obviously, once sales start and the phone is released those numbers are due to shift upward. The demand for the One is pretty high so once its public in the US, there won't be all this "the sky is falling nonsense".

Targon says:

That is exactly why delays in getting the HTC one out the door has been hurting the company. Software makers face the same issue, where employees getting paid needs to be offset by revenues, and delays in when the return on investment(pay to employees) will begin can be REALLY painful.

The delays between when the Palm Pre was first announced and when it finally became available really hurt Palm, and delays in getting the production process improved(with higher quality), also really hurt. If the Pre Plus had been sold 6 months sooner, it may have done better, since the CPU would have been competitive longer.

return_0 says:

You want HTC's CEO to commit suicide?

Wow… not insane at all.

Gekko says:

figuratively. go look that word up.

robotaholic says:

I think the 4 ultra pixel camera and forced blinkfeed launcher killed the one.

Not according to AndTech......Highest award EVER given to a smartphone. Looks like the One will be the "One" to bring back HTC.

http://anandtech.com/show/6747/htc-one-review

hmmm says:

At least it is a profit. Look at Blackberry or Windows phones. Anyway, that doesn't leave much money for research and further innovation but at least they are still profitable. I really don't know what they need to do to start growing like Samsung has. Their phones look nice enough.

I just got turned off HTC when I got my HTC EVO LTE when I found out HTC shipped the phone with known LTE problems which I still don't think are fixed 100%. I found out about that because my area now has LTE coverage so it had become an issue. I sold that phone and switched to a GS3 which has been perfect.

Not sure what LTE issues you are talking about but I have had the EVO LTE since launch and have had zero issues. I avg 12-15 mbps on 4G and 1.5 mbps on 3G. Running the sense 5 now and this is the fastest phone I have ever owned. Sense 5 is nothing short of awesome, makes this a totally different phone.

Targon says:

Samsung has the benefit of making most of the components that go into their phones, so they could even do a "break even" on the parts they make themselves, and end up with a larger profit overall on the phone sales. Those profits can be fed back into the R&D department for the custom software you see, and that encourages yet more sales and profits, which if fed back into the R&D will help accelerate the process.

At some point, Samsung will make more of a profit per sale than Apple, simply because manufacturing cost will be so much lower.

randyw says:

No one device can save HTC. They have made way to many mistakes.

RonD says:

To use a car analogy, GM wouldn't sell many cars if the only offered 2 door models (because they look nicer), an engine that you couldn't replace the spark plugs on (none replaceable critical part), no trunk for extra storage (because Ferrari doesn't have trunks either and they look nicer), and they locked the hood shut at the factory because they didn't want you to work on the engine (can't touch the software).

jasonaward says:

There's a slight difference between a phone and a car that costs roughly 100 times as much. Your suggested scenario just isn't realistic. Plus, they both are more concerned about mass market appeal than they are enthusiasts.

While I haven't received my One yet, I can honestly say it appears to be a beautifully constructed phone, and if the reviews of it are accurate, I and most other buyers will be very happy with the device.

heathroi says:

ahh you're getting that explains it then. Hopefully the one works for them as it would be shame to see them disappear.

I'm sure they had a good reason to distract focus from the ONE with the FIRST and that will translate into record second quarter profits. Yeah right.

kxs783kms says:

Jasonaward, sorry they are not Apple, therefore, they can not do what Apple does.

ronzkie21 says:

I seriously hope the One will turn things around for HTC. I don't want them to go broke and shut down. I wanna keep HTC so I don't have to settle with another brand.

If you make a unibody phone for unified solid build quality, how can you have a swappable battery or an sd slot on the device???

Yes. Make a plastic phone with separate cover pieces and then you can have those. In other words: In order to make a unibody aluminium phone with the ability to be able to switch the internal battery or add more memory you would need:

A: A hammer to smash your shiny phone open.
B) A Chainsaw to cut your UNIBODY phone into pieces.
C) To Dodge the laws of physics and somehow switch the battery and kick the SD card in without touching the phone - blindfolded - without hands.

Also: we are tech nerds and we represent a fraction of the potential customer market. Stock android isn't the sales magnet. Maybe for us. Personally I'm okay with Sense 5.0 when it's fast and actually looks good + the stock browser is faster than Chrome (well optimized). TouchWiz looks like somebody vomitted all the colors of rainbow to the UI.

The only thing they need now is FOCUS. Get those production cycles going and deliver the phones to buying customers god da*****! So much stuff going on with HTC First, One, Droid DNA. Only thing they need is Marketing and marketing without being able delivering the actual goods is pointless because that equals to so much talk but so little action.

toddjy says:

We're worried because they made only $3 million dollars in profit? This is after expenses people. When they stop making profit, or when they start losing, then we can worry.

I'd take 3 million for a year any time. And that wasn't even for a whole year, it was just for a quarter.

We need to stop looking at Apple for return on investment. I'd rather by something that's making only 3 million profit than from a company that's making 10 million. That means I'm actually getting my moneys worth, and my money is a whole lot more important than the company's money.

speculatrix says:

This could open up HTC as a target for acquisition. Given the design of the One, maybe Apple would buy them because Apple have come to realise not having a manufacturing facility is a major weakness.