HTC’s operating costs will plummet 30-40% once Google deals is approved
The deal HTC struck with Google last week still needs to be reviewed by regulators and likely don’t go into effect until early 2018, but it’ll a significant impact on HTC’s bottom line. Yes, an extra $1.1 billion in cash will definitely help HTC get back on its feet, but selling off half of its Research and Development team to Google will significantly reduce overhead costs for HTC. According to HTC Chief Financial Officer Peter Shen, the company will see its operating costs plummet by 30-40%.
If the estimate is true, HTC will easily be able to return to profitability.
To see how this would play out, we looked at HTC’s results for Q2 of this year. The company posted a quarterly loss of NT$1.95 billion. The report lists HTC’s quarterly operating costs at NT$4.4 billion. If HTC had a 30-40% reduction in operating costs during Q2, operating costs would have ranged from NT$2.64 to NT$ 3.08 – potentially reducing HTC’s overall losses from NT$1.95 billion (roughly $65 million USD) to NT$190 million (6.3 million USD). It’s still not a profit, but it’s pretty darn close.
There are still a lot of questions left to be answered, but we’re excited to see how things will play out for HTC in the coming year.