HTC continues to quietly sink; insiders blame its chief executive

Summary:The ailing phone maker doesn't need a new advertising strategy, or a new flagship device, say insiders. It needs a new chief executive. Even then, there's no obvious successor.

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Image: CNET/CBS Interactive

HTC is slipping into the financial abyss, and has been for some time.

The company has seen a 70 percent fall in net profit during its 2012 first quarter. Meanwhile, its revenue has fallen by shy of 35 percent compared to the same period a year ago, with the company still reeling from a painful January where revenues fell by almost 50 percent. And no let-up said it was facing gross margin challenges due to the high cost structure of its flagship smartphone HTC One.

You get the picture.

According to Reuters' latest, it may not be the company's devices, or strategy, or even its advertising campaigns to blame, so say current and former executives, who are firmly pointing the finger of blame at chief executive Peter Chou, a man who has been leading the company for ten years.

Just one example of Chou's leadership and decision making was described in a so-called "shoot-from-the-hip" anecdote. The piece described how the HTC team realized it needed another device for its portfolio. Chou sketched a few designs on a whiteboard, but also included a price point, and a launch date — which was just three months away.

This did not take into account enough time for manufacturers to build the device, let alone garner media reviews often used to propel devices into the mainstream market.

"Having the ability to just tear up a plan and say, OK, this is the new thing and we're going to get it done fast," said a former senior foreign executive speaking to Reuters. "That's Peter."

But he also "openly berated managers" and "overrode their decisions," often with little discourse, according to insiders.

Many executives have left HTC and moved onto different industries or stronger companies. The company's chief operating officer stepped down in June , just weeks after the company reported a 98 percent drop in its net income. HTC's digital marketing director John Starkweather and global retail marketing manager Rebecca Rowland also left just weeks before. 

While HTC was once third in the smartphone rankings, the company faced increased pressure from other Android device makers, notably Samsung, which develops and builds its own chips and components in-house. 

And while the company quietly sinks, Chou will likely go down with the ship before he leaves the company, according to executives, which is only compounded by the fact that there is no obvious successor.

Topics: HTC

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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