HTC still profitable, HTC One isn't to blame for record lows

HTC still profitable, HTC One isn't to blame for record lows

Summary: Despite the majority of dramatic headlines, the HTC One had little to do with record low profits for HTC last quarter. Actually, with no new products in the quarter, it's quite surprising that HTC is still showing profits and not losses after struggling for more than a year.

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Yesterday, my colleague Zack Whittaker posted on the latest unaudited first quarter HTC financials. However, despite all of the headlines you may have been reading that attributed these poor financials to the HTC One, I highly doubt the release of the smartphone had much to do with these results. I am actually surprised that HTC is still reporting profits after more than a year of declining financial results. We are going to have to wait a quarter or two to see what the actual impact of the HTC One has on their bottom line.

HTC still amazingly profitable, HTC One isn't to blame for record lows
(Image: HTC)

The HTC One was announced on 19 February. Quarterly financials are accounted for from January through March, and the HTC One wasn't even released anywhere in the world until 29 March. It was only delayed a week from the original launch date in the UK, so I don't see how a week to ten day period of sales was ever going to help profits for HTC. I guess blaming the delay on low profits makes for a better headline than just stating HTC had record low profits since they didn't release any new significant products in the quarter.

Revenue was expected to fall this quarter given that no new products were available for most of the quarter, and while 19 analysts estimated that it would fall roughly US$1.82 (NT$54.7) billion, HTC beat those estimates with a revenue loss of US$1.43 (NT$42.8) billion. It is clear that HTC is struggling financially, but placing that blame on the HTC One is not accurate. Every reviewer has given high praise to the device, as you can see on the Gdgt consolidated review page, and while a single device likely won't save HTC, Apple has shown that a single device has the potential for serious profits.

Actually, if you look at the March revenue report, you will see it is up nearly 40 percent over February. Let's give the HTC One a chance to appear on US shelves before killing it from consideration prior to its release.

HTC hasn't reported a loss since they were listed on the stock exchange in March 2002, and despite a very disappointing 2012, they continue to show a profit even in today's highly competitive smartphone market. As I wrote recently, I think HTC needs to stay focused and not diversify into dead-end markets like Windows RT, especially given their current financial status.

2013 will be an interesting year for struggling smartphone companies like BlackBerry, Nokia, and HTC. I honestly think BlackBerry has the best chance for success and making a full comeback given that they have a strategy and plan; BlackBerry 10 is a solid operating system, and the Q10 should appeal to those who still want a hardware QWERTY keyboard.

Nokia is reliant on Microsoft and Windows Phone, and despite being available for over two years, Windows Phone continues to hang out in the 3 percent market share range. Nokia is clearly the leading Windows Phone race and may help gain Microsoft some new customers. Then again, if Microsoft wipes out any path for upgrading current Windows Phone devices to their next OS (WP8 to Windows Phone Blue) for a second time, I think they will kill the momentum and turn customers away.

HTC makes both Android and Windows Phone devices, but despite their top notch hardware, I think their lack of marketing, poor update history, and lack of a focused strategy make their long term future uncertain at this time.

Topics: Mobility, Android, HTC, Smartphones, Windows Phone

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11 comments
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  • Blackberry Making a Comeback, Seriously

    Have you seen the latest sales numbers released this past week by Gartner. Blackberry sales have fallen off a cliff. It doesn't matter that they finally have a decent OS and a strategy. The problem is that boat left the dock a long time ago.................Blackberry missed the Mobile Technology boat.
    vadertime
    • "Blackberry Making a Comeback, Seriously".......

      Did you see where he said that Blackberry was making a comeback? I read that of the three companies mentioned Blackberry HAS THE POTENTIAL and best chance to make a comeback.
      Do you read, seriously?
      tacona
      • No they dont. Their strategy and plan are the same as theyve been for the

        last 3 years. BB10 is still a bust, Z10 or Q10. And yeah the HTC One is definitely part of the problem for htcs poor quarter because it should have been in retail outlets when the quarter started and it wasn't. And now they look like they wont have something ready in stores for the beginning of Q3. They still don't even have the WP version of the One out yet.
        Johnny Vegas
        • Ummmm... What?

          I don't really get what you're going at here, the HTC One is confirmed as coming to US in late April and has already arrived in other countries, albeit in limited supply. The chances of them not having something before Q3 is highly unlikely seeing as the product is mostly available from Q2.

          Also I highly doubt they'd release a WP version of the one within one year of announcing the HTC 8x... If they do at all, it probably won't look like the HTC one in any way. I mean their current WP "version" of the HTC One X looks nothing like it.

          I don't really understand how HTC was supposed to release the HTC One when the quarter started when they only announced the device in February.

          I do have to say though, the delay's are INCREDIBLY unfortunate. I'm not looking at getting my device almost 2 months after I was supposed to.
          DJTripleRRR
    • A better measure is how many enterprises are evaling the Z10

      Blackberry's roots are in the enterprise, and unlike individual consumers, enterprises don't just go out and buy a new model ... they bring it in house to evaluate, and if it's selected for purchase, plan a rollout (including any backend infrastructure changes needed). The sales of BB in the last month don't reflect any of this activity.
      daboochmeister
  • HTC should have released a WP8 model of HTC One...

    Big mistake...
    Owllll1net
  • A few reasons why the HTC One is at fault

    You bring up some good points, but there are still a few things to consider before writing off the HTC One's delayed launch as a contributor to HTC's low profits. Originally, the HTC one was slated for an European launch of March 15th with a US launch on March 22nd. If HTC would not have any supply issue with the camera component, it would have shipped out 1-2 million devices to service providers across the globe before the end of March.

    Since those devices were delayed due to camera component shortages (something HTC was not expecting), HTC is probably sitting on a huge inventory of displays, processors, batteries and aluminum cases; costly inventory which was accounted for in HTC's Q1 earnings report. 1-2 million devices worth of components would probably ad up to $200-400 million worth of component inventory which simply got subtracted from HTC's profits for the quarter.

    Because of this, HTC's numbers for Q2 may be artificially inflated since they will be selling phones which were build using components which were paid for during the previous quarter.
    htcsource
  • WP 8??? REALLY???

    Are you guys Fkin serious? WP8??? Trash OS!!! my wife has the Lumia...there arent any apps for that phone....you guys need to go to another forum....yall are just trolling on htc one forums talking trash....get lost.

    BTW once the damn phone ACTUALLY hits the stores....we can talk numbers....in the meantime all of your speculations mean dirt (talking to commenters)
    criticalera
  • Consistency is missing at HTC

    HTC has no consistent line of products. Call Samsung and Apple boring ... but they deliver year after year new versions of a successful phone. One could describe this as "More of the same". I agree, nevertheless customers embrace the idea of a progressive line of products where the prospective buyer is assured to know in advance what she will get.
    HTC on the contrary issues an arbitrary bunch of new phones every year leaving the customer in dire uncertainty what to expect next.
    EnticingHavoc
  • HTC One isn't to blame for record lows...actually it is

    When you have a new device coming out, the carrier will want to get rid of their inventory as soon as possible.

    For example.
    "Hi ATT, I'm launching the HTC One at the end of MArch"
    "Hi HTC, that's great. WE are going to end of life this product and will stop buying from you in January so we can migrate to your new flagship".
    "That's fine."

    "Oh, wait ATT, we are one month behind in launch. So, you can purchase the HTC One X for another month".
    "I don't think so HTC, why would I purchase more of an End of Life product? I can purchase the Samsung Galaxy SIII which still has relevancy, or the XXXXX device that is still new. We can go one month with no HTC One X".

    And that's how the HTC One affects their bottom line. ATT will not invest in a phone when they have a whole bunch of other choices...and the truth is that no one is going to cry that they can't get an HTC flagship device for a month.
    casualsuede
    • I meant to say:

      "Hi ATT, I'm launching the HTC One at the end of MArch"
      "Hi HTC, that's great. WE are going to end of life the HTC One X and will stop buying from you in January so we can migrate to your new flagship".
      "That's fine."
      casualsuede