HTC One Sales are Good, but Company Still Likely to Post 8% Net Loss in Q3

[dgstorm]

Despite the new HTC One selling very well for the company, it looks like HTC is still in for some hard times. According to their latest financial results press release, sales of the HTC One were solid and in fact were much better than their previous hero device of the same time last year. Unfortunately, despite these excellent results for the HTC One, the company is still hemorrhaging money and is likely to report an operating loss of 8% in Quarter 3.

The company is shifting their strategy a bit in order to fight this. They are introducing the new mid-tier HTC One Mini, and they also plan to introduce more mid-tier products later in the year with a focus on the emerging market in China.

It looks like the HTC One isn't quite bringing them back to competitive levels just yet, but at least it's keeping them afloat.

Here's the press release,

HTC reports 2013 second-quarter results

Taipei, Taiwan – July 30, 2013 – HTC Corporation (the Company, TWSE: 2498), a global leader in mobile innovation and design, today announced consolidated results for the Company and its subsidiaries for the second quarter of 2013.

2Q 2013 Results
HTC posted quarterly revenue of NT$70.7 billion, with gross margin of 23.2 % and operating margin of 1.5%. Net profit and EPS were NT$1.25 billion and NT$1.50, respectively.

"My leadership team continues to focus on execution," said Peter Chou, CEO of HTC. "We are seeing expected results as we fill the channels and meet demand for the new HTC One. As we broaden our focus to include a new member of the HTC One family, the recently announced One mini, we are looking forward to delivering great products and results in 2H."
HTC announced key appointments, including Jack Yang to president of South Asia, Sirpa Ikola to senior director of marketing for South Asia, and Lorain Wong to vice president of global PR.

As manufacturing ramped up, the US saw sequential growth in 2Q, as well as expansion in retail channels. EMEA saw renewed strength in major Western European markets and emerging countries.

Progress was observed across Asia. HTC gained market share in Taiwan, showing an improved presence in Hong Kong and warm reception of its products by consumers in Japan. In China, sales of HTC's high-end models improved, while competition at the mid-tier and affordable intensified. In South Asia, the improvement of key operator relationships provides optimism about the region.

3Q 2013 Outlook
The Company's outlook for the second quarter of 2013 is as follows:

• 3Q revenue is expected to be in the range of NT$50bn to NT$60bn
• Gross profit margin is expected to be in the range of 18% to 21%
• Operating margin is expected to be in the range of 0% to -8%

The new HTC One has performed well in the market, better than that of our hero products for the same period last year. We aim to extend the momentum as we enter into the second half of 2013. The new HTC One has also helped the company establish strong brand awareness and received numerous accolades as the world's best smart phone. With the help of HTC One, we have regained superphone market share across major markets including China.

We also have plans underway to launch a range of innovative and competitive mid-tier products in the coming months. We hope to regain momentum and market share in these segments in Q4. This will address our challenge of mid-tier products competitiveness.

Our overall gross margin has been impacted by the relatively higher cost structure, lack of economy of scale and certain provisions needed to facilitate the clearance of aging products in the channel. Actions have been taken and we expect to see improvement in Q4
We are also optimizing our organization, including the improvement of management efficiency and effectiveness.

People, innovations, and technology are the core assets of HTC. We will continue to invest in innovations and technology, as well as retaining and rewarding our best talents. We look forward to a brighter future for HTC and continue to delight our customers with the best and most exciting products.

 

[zomnomnombie]

Please just kill Sense already.

 

[cybertec69]

Add removable battery and micro SD card support, and their phones will sell like hot cakes, the way this company is operating with the mindset of a mule "one way direction to their demise", they will soon be no more. I can see them being bought out by another competitor in the near future.

 

[pc747]

It is going to take awhile to recover from years of bad decisions and devices. HTC took a big hit in reputation thanks to the thunderbolt disaster. And though they fixed the issues public opinion already moved on to other devices. Than the poor timing of releasing the rezound with the razr and nexus the year after and that is just me highlighting the mistakes with vzw customers. The HTC one is a good device that sold well but one device will not fix years of failure. It will take a few more good devices along with strategy and planning. Continue to make solid devices and offer customers choices (Google experience devices) along with throwing in a sd card slot.

 

[kodiak799]

They still don't get it. They are going to launch more mid-tier devices rather than discounting older models like Apple, and to lesser extent even Samsung. Instead HTC will realize higher production costs with more phones and shorter runs, and also higher R&D for more devices.

 

[combatmedic870]

They still don't get it. They are going to launch more mid-tier devices rather than discounting older models like Apple, and to lesser extent even Samsung. Instead HTC will realize higher production costs with more phones and shorter runs, and also higher R&D for more devices.

This......^^^

They need to release sanother top tier device and discount the one. The one was a great step in recovery though. I really like HTC.