HTC's substantial losses in second quarter
HTC Corp. sank into the red again in the second quarter, hit by plummeting smartphone sales and valuation losses on production lines left idle.
HTC said on Monday its unaudited net loss in the quarter ended June 30 was 8.03 billion New Taiwan dollars (US$261 million). That snapped four straight quarters of modest net profit, a short-lived result of its strategic shift to sell more midprice phones in emerging markets as opposed to more expensive ones, and cost cuts by outsourcing some of its manufacturing.
In the second quarter, its revenue totalled NT$33.01 billion, almost half the NT$65.06 billion it fetched in the second quarter of 2014. HTC doesn’t disclose its shipment number, but the company has said it has closed some of its production facilities as sales have dropped and as it has outsourced some of its manufacturing. The company didn’t reveal its valuation loss on idle production lines.
HTC was a top Android smartphone maker a few years ago, but its return to losses indicates how second-tier smartphone makers are struggling in a maturing market.
Low-cost smartphone makers, such as China’s Xiaomi Inc., are grabbing emerging-market share quickly at a time when global smartphone shipment growth, particularly toward the high-end is slowing.
Despite praise for the sleek design of HTC’s flagship device for this year, the One M9, some analysts were skeptical, citing the phone’s incremental hardware upgrade from its One M8 last year.
HTC’s shares in Taipei sank to a record low of NT$71.10 on June 30, compared with an all-time high of NT$1,300.00 in April 2011. The shares ended flat at NT$73.80, ahead of the company’s announcement.
Chairwoman Cher Wang, who returned to day-to-day operations last year and has also been doubling as chief executive since late March, has said the company “is moving beyond the smartphone business.” It has recently launched a fitness band and a virtual reality device but will this be enough to save them? Or is it too little too late?
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