HTC Sees Grim Decline But Looks To HTC One Boost

HTC has posted another set of grim financial results, but CEO Peter Chou is banking on the newly released One smartphone in this “pivotal” second quarter.

Yet there is no disguising the fact that HTC’s revenues and profits took a nosedive in the first quarter. Despite that, the company remains optimistic about what’s to come.

Pivotal Quarter

During the first quarter the company had hoped to benefit from the new HTC One, but supplier delays put the smartphone in just a handful of markets, instead of the planned 80.

The result of this delay was a net profit of approximately $2.9 million (£1.9m), a 98 percent drop compared to the same period last year. Revenue likewise was down nearly 37 percent to $1.45 billion (£933m).

The good news however is the HTC One smartphone is arriving into sales channels and reviewers have been enthusiastic.

“This is a pivotal quarter for HTC,” CEO Peter Chou said in a 2 May statement. “In February our teams set a new standard for smartphones, launching the new HTC One. The reviews of fans and critics alike have been overwhelmingly positive and we look forward to delivering on the promise of this device.”

More specifically, HTC expects its second-quarter revenue to rise to approximately $2.37 billion (£1.5bn). While first-quarter gross profit market was 20 percent, during the second quarter that’s expected to rise to between 22 and 24 percent. Operating margins, at 0.1 percent during the first quarter, are projected to rise to between 1 and 3 percent in the second quarter.

Chou said HTC is also improving its marketing execution.

“It’s the first time since HTC developed its brand that we are really integrating brand, product and marketing all together,” Chou told investors during a 2 May call, according to Reuters.

Chou also promised a bigger marketing push, sharing that the marketing budget for the first half of the year was set to increase by 250 percent year-on-year.

Positive Reviews

While HTC will face tremendous competition from the Samsung Galaxy S 4, now shipping to US carriers, and likely a new iPhone sometime this summer, its hopes seem not entirely misplaced.

In a startling number of Galaxy S4 reviews, the HTC One was mentioned, with and without Samsung’s natural rival, Apple.

The Wall Street Journal’s Walter Mossberg went so far as to write, “I urge readers looking for a new Android smartphone to carefully consider the more polished-looking, and quite capable, HTC One, rather than defaulting to the latest Samsung.”

HTC also immediately kicked off a deal in the United States for the phone. Buy a One between 2 and 5 May from AT&T, Sprint, T-Mobile or Cincinnati Bell, and HTC will offer a trade-in value (“to eligible smartphones”) of up to $375 (£241) but at least $100 (£64). The amount will be paid via a Prepaid Visa Card.

A Motorola Droid Razr is good for between $100 (£64) and $184 (£119), a Galaxy S III for between $130 (£84) and $210 (£135), and the iPhone 4S for between $200 (£129) and $255 (£164). But the ultimate trade-in is the iPhone 5. Swap Apple’s latest for HTC’s latest, and you can receive between $300 (£193) and $375 (£241).

This could be good news for The Verge’s David Pierce, who after reviewing the Galaxy S 4 wrote, “When my contract is up … I’ll probably be casting my lot with HTC instead of Samsung.”

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Originally published on eWeek.