Horrible Trading Consequences From HTC’s Q4 Earnings
Sale of Beats Electronics stake helps HTC record a Q4 profit, but the market isn’t convinced
Smartphone maker HTC has released its Q4 results, revealing that the company has come in below the expectations of analysts yet again despite the release of several new big-name products.
The Taiwanese company announced it had recorded a net income of T$310 million ($10 million/£6 million) for the quarter ended December 31, a major fall compared to a net profit of over T$1 billion for the same period a year ago. The report also revealed a net loss of T$2.97 billion in the company’s previous quarter.
The stock market responded quickly to the news, with shares in HTC falling by 4 percent to around T$133, valuing the company overall at around $4 billion.
Were it not for the sale of its 25 percent stake in Beats Electronics for $265 million back in September, HTC probably would have recorded a second consecutive quarterly loss, which could have led to further stock price falls.
Falling behind?
It’s been a difficult few months for HTC, which is also currently embroiled in a series of lawsuits around the globe with several other smartphone manufacturers, including Apple, Microsoft and Nokia concerning patent infringements.
Recent figures from Gartner showed that HTC’s global share of the smartphone market has declined to a mere 2.2 percent in the third quarter of 2013 from a peak of 10.3 percent in the third quarter of 2011. The company has also embarked on a cost-cutting campaign which including outsourcing some production sectors and purchasing its processors from cheaper vendors, aspects which hit it hard when supply issues hit the sales of the One smartphone last year.
The company’s launch of high-profile devices such as the One, One Max and One Mini smartphones were well received by commentators, but this has so far failed to result in corresponding sales figures, with consumers turning instead to Samsung or Apple devices. HTC is supposedly gearing up to launch the successor to the One, codenamed the M8, later this year, possibly at Mobile World Congress in Barcelona in February, which it hopes should help it revive some of its fortunes.
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