HTC Profits From Cost Cutting And New Handset

HTC has made a welcome return to profit, thanks in part to its new flagship handset and its cost cutting exercise.

It comes as the struggling Taiwanese smartphone maker seeks to restore its fortunes in the fiercely competitive mobile handset market.

Welcome Profit

For its second quarter HTC posted a net profit of NT$2.26bn (£44m),  up 80 percent from the same quarter in 2013. This was much better than the NT$1.88bn (£40m) net loss it posted in the first quarter. Analysts surveyed by Thomson Reuters had forecast the second-quarter net profit would be an average NT$2.09bn (£41m).

But the company is by no means free of its troubles yet, as it continues to face a persistent and worrying slide in sales. Revenues for the quarter ending 30 June disappointed analysts when it fell 8 percent to NT$65.1 billion (£1.27bn). This was at the low end of analyst expectations of NT$65bn to NT$70bn (£1.26bn to £1.36bn)

HTC is hoping that its flagship HTC One (M8) and a refreshed catalogue of mid-range devices will improve its fortunes in the second quarter and allow it to better compete with other Android manufacturers.

The flagship HTC One (M8) was launched in March and boasts many of the features of the original HTC One, along with a number of new imaging and software enhancements and a full metal unibody design.

Crowded Android Sector

But it is clear that HTC is being hurt by the near total domination of the Android market by Samsung. Three years ago HTC was the leading maker of Android smartphones in the United States, but it is now outside of the world’s top ten handset makers. HTC’s mid range handsets are also facing a host of low cost Android smartphones from the likes of Microsoft/Nokia and other Chinese makers, all of which are competing for a slice of the Android pie.

The company has previously said that that it is working with Microsoft to bring the Windows 8.1 update to its long-in-the-tooth 8X device, which was released late in 2012. Regarding a new Windows Phone however, HTC said earlier this year it would continue to take new products into consideration, although there was ‘nothing concrete right now’.

Whether its high-end flagship smartphone, the HTC One (M8), will help reverse its declining sales, remains to be seen. Apple and Samsung are expected to launch their next generation smartphones in the second half of the year, which could further impact HTC’s revenues.

HTC is doing the right things however, as its smartphones continue to be well received and gather positive reviews. It has also cut costs, which included outsourcing some production options and purchasing its processors from cheaper vendors. These were problem areas for the company when it was hit hard by component supply issues for its One smartphone last year.

And the company is also planning a move into the wearables market.

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