HTC's revenue slide continues as Q4 ends with December thud

HTC's revenue slide continues as Q4 ends with December thud

Summary: HTC's December sales took a big hit, but the fourth quarter was in line with lowered expectations. Where does HTC go from here?

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HTC reported another dreadful quarterly revenue decline compared to a year ago, but the company's sales were within its lowered forecast.

The smartphone maker, which in the fourth quarter launched an ad campaign with Robert Downey Jr. and an Iron Man theme, took a big hit in December as sales fell 42.46 percent from the same month a year ago. HTC's sales also collapsed sequentially in December.

HTC said its fourth quarter revenue was NT$42.89 billion, a sum that was in line with guidance given in the third quarter. The company reported an operating loss of NT$1.56 billion, but profit of NT$0.31 billion after tax. Earnings per share in the fourth quarter landed at NT$0.38, but got a boost primarily from the sale of Beats Electronics back to Dr. Dre.

While those results were telegraphed after a rough third quarter, the larger question is where does HTC go from here. HTC had hoped that Downey and the HTC One Max would boost sales. Perhaps CES 2014 sheds some light on HTC's strategy, but the company is dangerously close to falling out of the smartphone conversation.

HTC released its news outside of normal business hours in Taiwan and a cynic (I'm guilty as charged) would say the company was trying to clear its decks and hope no one noticed ahead of CES. 

This monthly sales history isn't screaming momentum:

htcmonthly 2013

 

HTC's ad campaign revolved around a "here's to change" theme, but the smartphone maker's One franchise just isn't moving enough units. HTC will need further change and one move may be to go back to being a white-box manufacturer of devices.

 

Topics: Smartphones, HTC, Mobility

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14 comments
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  • what HTC needs to do is ...

    Start building BlackBerry devices. This should follow from the logic of Blackberry needing to build Android devices. No?

    :-)
    greywolf7
  • Trying to make money in environments where property has little value

    The above is the problem you face when you try to make money in an (Android) ecosystem which accords little to no value to both IP and physical property. In such an environment, you are can only rely on scale to do well. This should be taught in economics 101. This is why there is no hope for HTC in the Android ecosystem. HTC needs to dump its CEO, and turn its attention to Windows Phone, or something else.

    I believe the above is also instructive to MS. Free software is great for customers in the short run, but a bane for software developers, and undermines the development of exceptional software - which is in turn is bad for customers in the long run. I believe MS needs to carve out a clearly delineated section of its Windows app store, which contains quality software sold at a minimum price, like say $5. I believe MS should distinctly promote this section of the store to customers, and encourage software developers to populate this section of the store with their apps. I believe MS should do the same for its Windows Phone store. If MS wants the best apps in its stores, it has to create an environment where developers can obtain good prices for their apps.
    P. Douglas
    • Competition is tough

      But going WP?! Seriously?!
      HTC have WP devices and they have failed miserable, as the Samsung equivalent.
      AleMartin
      • Maybe HTC could do well on Windows Phone

        I'm not so sure Windows Phone was failing per se for HTC and Samsung. I believe both manufacturers went for the lower hanging fruit, Android. HTC failed at it, while Samsung succeeded, because Samsung could muster scale.

        I believe stores in stores is MS' path to increased sales of higher end phones, for itself / Nokia, and other phone manufacturers. I believe if MS can get this sales network in place, it should be able to grow the platform and entice manufacturers to its Windows Phone. Also as I indicated in a comment above, I believe if MS creates sections in its app stores (professional software sections), where apps in these sections are never compared or shown with free software, it could distinguish itself from the competition, by having the highest quality apps on any platform.

        It may be possible for HTC to make money on Windows Phone now. The Windows Phone platform is actually the fastest growing mobile platform. HTC could discuss the matter with MS. Maybe HTC could go back to doing what it was doing before, while dipping its toes in the WP platform.
        P. Douglas
        • Dude

          HTC Devices with WP8 are mostly under $100 off contract.
          slickjim
        • Reality is very different

          Actually HTC is doing better than the "unbeatable" Samsung with windows phones.
          Nokia has more than 90% of WP and their smartphone is not yet profitable. 10% share in android would be huge for anyone.
          WP devices are the ones with the smaller average selling price, a lot smaller than android asp. Nokia so far has failed to sell expensive WP phones.
          Making money on WP now?! Now that Microsoft is buying Nokia! Is that a better context for others? I don't think so.
          The thing is oems can go with android and face fierce competition, try something brave like Jolla - very uncertain, wait for a good windows phone OS or just leave the market.
          Again those saying only Samsung can make profit with android are funny when they say the alternative is WP - because Nokia owns 90% of a small pie, Samsung "just" 40% of a huge pie.
          AleMartin
          • I still believe there is a good chance HTC could well with WP phones

            It is true that Devices and Services portion of Nokia MS is about to buy suffered a slight loss ($118M) in the final quarter, but this includes Nokia's lower end phones and dying product lines. The Lumia line probably carried the Devices and Services portion of Nokia, and the other portions pulled down the Nokia portion's balance sheet.

            http://www.theverge.com/2013/10/29/5041528/nokia-q3-2013-financial-report

            Can the Windows Phone platform sustain HTC fully right now? That question is moot, because HTC cannot transition quickly to that position. What I'm saying is that the Windows Phone platform has greater potential down the road, because it is increasing market share, and there is greater intrinsic ability to make money, because IP and good hardware, has considerably greater value than in the Android ecosystem. Also I believe stores in stores are MS' key to being able to drive users to higher end phones, along with best in class professional software, which MS can foster, if it carefully nurtures a prized section in its app store, where apps are not subject to the price pressures of free / overly cheap apps.
            P. Douglas
    • There you go agian telling lies...

      HTC Fails because, they don't understand their potential customers period!

      They lost money on Beats because they bet on it seeing it was popular with certain age ranges but, failed to understand that Beats was hated by almost everyone else as junk.

      They also lost many Customers on their Ultra Pixel thing because, while they were right, they should have going with a higher resolution and physically larger sensor but, they made a gamble and lost!

      They bet on their stupid front end for Android and while that front end used to be decent, chipping away at advancements too many times has left Sense UI with very little in common with the Sense that people actually liked!

      So, anybody can make an Aluminum Unibody phone with a Gorilla Glass Front and Under-Sized Battery but, getting the details right is where you have the most to lose.

      Now lets revisit this, HTC is failing because they made bad choices and jumping to Windows Phone 8 right now, won't fix those choices... It will just create more chaos in their product lines (Remember they have bottom dwelling Windows Phone products already).
      slickjim
      • Good points.

        I agree.

        Right now it seems that for great quality mid to high end Android devices, Samsung is the go to manufacturer.
        For great quality mid to high end Windows phones, it's Nokia.
        Apple obviously has the high quality iPhone.

        Given the price range and discounts at any given time for these from the carriers, HTC needs to be building blockbuster devices. The HTC One shows they can do this, but they really need to thin out the product line and concentrate on things like HTC one, as Samsung has with their Galaxy line.
        William.Farrel
        • The fact is that WP phones are the cheap ones

          ASP for WP phones is way smaller than anything else, with Apple in a distant first place.
          WP is the very cheap smartphone OS - that's the reality. Top of the line Nokia phones don't even appear in the map.
          AleMartin
          • You haven't been reading the article, I take it?

            Seems the only company really selling lots of WP8 is Nokia, as stated here in other blogs. If that fact bothers you, nothing anyone can do for you.

            Samsung seems to be the far and away leader in Android.

            HTC makes lots of little cheap models, and they can't move them to the volumes needed to sustain them, so they need to drop some of them and put resources into an HTC One line, as Samsung has.
            William.Farrel
      • And what of Sony, Google, LG, ZTE and others?

        P. Douglas's post is spot on. Only Samsung is making money on handsets in the Android space. Google? Lost $3000 million last quater. Sony? Made $0.000 million.

        For OEMs, Android is a losers game unless you have simply massive scale.
        Bruizer
  • Limited market

    The hard truth is there are only so many sales in the high end smartphone market. Pretty much everyone who wants a device has one and there is little reason to upgrade hardware wise unless you desire a bigger / better screen. Even Samsung is coming in lower than expected.

    Most people are fully content with the device they bought 1-2 years ago so like PC cycle, the upgrade window is going to be longer which means years with little to no sales. Why do you think all the US carriers have new upgrade plans?

    Android is not a platform to make money. Not one OEM other than Samsung is doing well with it. The low end is where the adoption is. I don't know if you call in lock in or not but people have pretty basic needs and pretty much any device from the last 2-3 years can meet them. Fanboys are not a big part of the overall market, maybe 2-5%.

    Expect to see more missed sales targets in 2014 from all in this vertical.
    MobileAdmin
  • A Terrible loss.

    It would be a terrible loss if hTC had to leave the smartphone game. As much as I love their designs, I would really hate to see Sense disappear.
    Bobby_Lane