HTC posts 91% drop in Q4 net profit, looks to emerging markets for growth

M7 flagship phone could help revive company's fortunes
Tools

HTC reported a 91 percent drop in net income in the fourth quarter and forecast continued declines in revenue as the company struggles to regain market share in white-hot smartphone market.

The company reported net income for the fourth quarter of $33.8 million, its lowest in eight years, on revenue of $2.02 billion. HTC also said it expects sales and margins to fall in the first quarter. However, the Taiwanese smartphone maker forecast a rebound in the second quarter thanks to a new flagship handset and growth in emerging markets.

HTC expects revenue of between $1.69 billion and $2.03 billion for the first quarter, down from $2.29 billion in the year-ago period, according to the Wall Street Journal, and below the average estimate of $2.19 billion from a Journal poll of six analysts. 

To regain its growth, HTC CFO Chang Chia-Lin told a conference call for investors on Monday that the company is now ready to offer smartphones in China for less than $320, or 1,000 Chinese yuan. "We're going to go down, but not below 1,000 ($160)," he said, according to Reuters. "We see there's still room to play" in the market for smartphones priced $160 to $320 in China. 

HTC CEO Peter Chou laid much of the blame for the smartphone maker's woes in 2012 on the back of weak and poorly executed marketing. In January he said the company will revive its fortunes in 2013 by being more innovative, nimble and focused in its marketing efforts.

The firm, once the darling of the smartphone world, especially in the U.S. market, has fallen on hard times recently due to intense competition from Samsung Electronics and Apple (NASDAQ:AAPL) as well as from the likes of Huawei and ZTE. According to research firm IDC, HTC captured 4.6 percent of the global smartphone market for the full-year 2012, down from 8.8 percent in 2011.

HTC has scheduled a press event for Feb. 19 where it is widely expected that the company will unveil the M7, its rumored new flagship Android phone. "The M7 could enter mass production in late February, with shipments ramping up from 1 million in 1Q13 to 2.5 million in 2Q13," Daiwa Securities Birdy Lu wrote in a Feb. 1 report, according to Bloomberg. HTC's sales may rise as much as 20 percent in the second quarter from the first quarter.

For more:
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Bloomberg article

Related Articles:
HTC's Chou vows to improve marketing, innovation in 2013
HTC not bringing Windows Phone 8S to U.S. market
HTC appoints new CMO, looks to get back smartphone spark
HTC's Chou says company happy with Apple patent settlement
Apple, HTC settle patent litigation, ink 10-year licensing deal
HTC hammered by Apple, Samsung as Q3 profits decline 79%