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

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.
Written by Matthew Miller, Contributing Writer

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.

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