HTC Smashes Q2 Estimates with Android

HTC, with its popular Android-running smartphones, blows past estimates with second-quarter net profits of $269 million and shipments of 5.4 million handsets.

Like rival Motorola, HTC is finding that closely aligning its smartphone strategy with Google's Android mobile operating system makes good business sense.

When releasing HTC's second-quarter results July 29, company officials said earnings rose 33 percent year over year, and they announced a number of promotions and new positions that have been created within the company to foster future growth.

During the quarter, HTC saw net profits of $269 million, according to the Associated Press. For the six months ending June 30, the Taiwan-based smartphone maker posted revenue of about $3 billion. Gross profits for that period were $911 million.

HTC saw particular strength in its smartphone business. U.S. consumers have shown their approval for HTC smartphones such as the Dream, Hero, Magic, Droid Eris and most recently Droid Incredible. During the quarter, HTC shipped a total of 5.4 million handsets-by far beating both its first-quarter total of 3.5 million handsets and its prediction of 4.6 million for the second quarter.

Rival Motorola has also followed an Android-heavy strategy, with a product line that could be easily confused with HTC's-it shipped the Motorola Droid before the HTC Droid Eris and the Motorola Droid X after the HTC Droid Incredible. The same day as HTC's earnings announcement, Motorola reported quarterly shipments of 8.3 million handsets, 2.7 million of which were smartphones. Facing current demand, however, HTC has had a difficult time meeting orders.

"[HTC CEO] Peter Chou has heard from me probably more often than he'd like to," Sprint CEO Dan Hesse said during the carrier's fiscal second-quarter conference call with analysts and media. Hesse added that the problem, not specific to HTC, is a worldwide shortage of parts, particularly of chips and displays.

Working to address the issue, HTC execs announced during the company's earnings presentation that the current production rate at its Taiwan facility is up to 2 million units per month, and during the third quarter the company plans to get production at a plant in China up to 1 million units per month, for a total production of 3 million devices per month during the fourth quarter.

The ramping-up at HTC may have, in part, been a catalyst for some of its newly created positions.

"As the smartphone industry expands at this lightning pace, it is essential for HTC to grow its management capabilities from within while also adding outside expertise," Chou said in a separate July 29 statement.

Former Sony Ericsson CTO Ron Louks-part of that "outside expertise"-is now HTC's chief strategy officer, responsible for driving new initiatives and "technology incubation" and working closely with HTC's engineering and operation departments.

Kouji Kodera, also formerly of Sony Ericsson, is now HTC's chief product officer, and David Chen, brought up through the HTC ranks, is now the company's chief engineering officer, in charge of pushing forward product development and engineering. Jason Mackenzie, formerly vice president of HTC North America alone, is now also responsible for Latin America, and Florian Seiche is now president of HTC Europe, Middle East and Africa.

"Today's announcement is not just a signal of our current growth and progress," Chou said, "but of our vision for bringing unique smartphones to people all over the world."