HTC’s Q2 losses outweigh four quarters of meager profits
HTC has announced that the company lost NT$8.03 billion ($261 million USD) for the second quarter. While the quarterly net loss was expected, it’s still a bit surprising as it was preceded by four quarters of profits. Revenue for the second quarter of 2015 totaled NT$33.01 billion, nearly half the NT$65.06 billion HTC pulled in during the same quarter in 2014. Due to low shipment numbers and the outsourcing of several of its low-end models, HTC has closed a handful of its production lines as a way to reduce operational costs.
The company’s stock closed at NT$73.80 before HTC released its revenue numbers for the second quarter. While a quarterly loss is typically followed by a drop in stock price, HTC did inform investors in early June that HTC would post losses ranging from NT$7.95-NT$9.05 billion ($257-$291 million USD).
Underwhelming sales of the HTC One M9 appear to be the major contributor to HTC’s disappointing quarterly numbers. The phone’s rehashed One M8 design and not-so-flagship specs failed to wow users, but HTC marketing team also failed completely by not putting together a cohesive marketing message around the phone and choosing not to promote the phone on TV. HTC’s latest marketing effort finally shows people why they should choose the One M9 over the competition, but it’s doubtful that the company will spend enough marketing dollars to get the spots in front of a massive audience.
While Cher Wang has insisted that HTC is moving beyond being just a smartphone maker, HTC is still projecting that smartphones will account for 90% of the company’s revenue in 2016. The HTC Re camera launch last year was a bit of a dud and the HTC Grip which was developed in collaboration with Under Armour and announced at Mobile World Congress has yet to materialize despite HTC’s projected “second quarter” launch schedule.
It’s clear that there are a lot of things going wrong at HTC. Unfortunately, there’s no easy fix. The upcoming HTC Aero and its “groundbreaking” camera technology may help HTC get the train back on the right tracks, but we expect HTC’s financial woes to feature prominently in news headlines for the foreseeable future.