HTC Posts Worst Profits to Date, Following Delay of the One

 
 
By Michelle Maisto  |  Posted 2013-04-08
 
 
 

Struggling smartphone maker HTC had another difficult quarter, it announced April 8.

While the company introduced a new flagship phone Feb. 19—the very well-reviewed HTC One—a parts-supply problem kept shipments sparse, hurting the phone's chances of boosting HTC's bottom line in the initial excitement around its launch. It planned to bring the One to 80 markets, but managed to get it into just three before the quarter's end, Reuters reported April 8.

HTC posted a net profit of $2.85 million during its 2013 first quarter—its lowest profit since it began reporting in 2004.

Since the rise of Samsung's Galaxy S line, HTC has lost its groove. With the One, many felt it may have found it again. The smartphone features a BlinkFeed home screen that's a constantly updating stream of information from media and social networking sites; two front-facing speakers, for a non-smartphone-like audio experience; and, among other features, an Ultrapixel camera that lets in 300 percent more light than the average model (according to HTC) and can create "Zoes"—an extended snap of up to 20 pictures and a 3-second video meant to turn a photo album into a "living, breathing gallery," per HTC.

The camera, however, was made specifically for HTC, which has made ramping up production difficult, HTC Chief Marketing Officer Benjamin Ho told the Wall Street Journal, according to a March 25 report.

Carl Howe, vice president of research at research firm Yankee Group, wrote in a blog post the same day that HTC's problem is a good one to have.

"While these shortages inhibit sales, it's a much better place to be than producing lots of handsets that end up sitting on the shelves," Howe wrote. "And to be fair, while HTC may be supply constrained, rival Samsung's Galaxy S 4 isn't even shipping in the U.S. for another month, so HTC has some time to correct the issue."

Meanwhile, HTC is also trying its hand with Facebook. On April 5, the social media site entered the mobile phone market with the First, a phone made by HTC that has the option of running a Facebook home screen "skin" on top of its Android underpinnings. AT&T will begin selling the First April 12 for $99.99 with a new contract. 

Analysts, however, expect the First to only be a hit with a niche audience.

"I'm sure those that spend 90 percent of their time on Facebook will find it appealing. But I believe that is a very small audience," Jack Gold, principal analyst with J. Gold Associates, said in an April 4 research note.

Gold called Facebook's collaboration with HTC "interesting."

"HTC needs some uptick in devices and the Facebook phone may give them some quick hits. ... But ultimately, I don't think the phone will be that popular because of the Home integration," Gold said. "Phones now are multi-purpose and any phone needs to stand on its own in the hyper-competitive world."

HTC's Ho, who joined the company in January, said some changes are in the works. HTC's "Quietly Brilliant" tag line is being retired—as the company is planning to be a lot less quiet about its good ideas.

"We have a lot of innovations, but we haven't been loud enough," Ho told the Journal, adding that HTC plans to be "bolder."

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