HTC CEO Peter Chou said he would not be stepping down from the smartphone maker anytime soon, despite declining market share and profits and worries about the company's future. In both an interview and at the company's annual shareholder meeting, he said HTC is making progress in improving sales thanks to expanded marketing efforts and the One, HTC's flagship device on which it is basing its turnaround.
Meanwhile, Bloomberg reported that, according to unnamed sources, HTC signed actor Robert Downey Jr. to a $12 million endorsement deal. Downey, famous for playing the title characters in the "Iron Man" and "Sherlock Holmes" franchises, will appear as himself likely in TV, print and billboard ads, and will have final say over creative elements. HTC said it has nothing to announce in terms of a marketing campaign for the One. The move could either be a sign of confidence HTC and Downey have in the company's brand, or a mark of desperation for a firm looking to boost sales of its hero product.
There has been growing speculation that Chou would step down if the One did not perform well. However, Chou brushed aside those ideas and said he is committed to the company.
"I know you guys want to ask, will I quit," Chou told the Wall Street Journal in an interview. "There are a lot of rumors that say I would quit, but I never said that. I'm not going to find another job."
David Yoffie, a member of HTC's board and Chou's former professor at Harvard Business School, told the Journal that HTC's board has not considered replacing Chou. "The board has a lot of confidence in Peter, and share price is not going to drive decisions on the future of the chief executive," Yoffie said.
Chou and his executive team have been buffeted by competition from Samsung Electronics and Apple (NASDAQ:AAPL) in the high-end of the smartphone market and Chinese vendors Huawei and ZTE on the low-end. As a result, HTC's global smartphone market share fell to 2.5 percent in the first quarter of this year, from 9.3 percent in first quarter of 2011, according to Gartner.
"HTC made mistakes in its product pricing and it had too many models, which confused consumers," Jeng-Han Cheng, a senior manager at Taiwan's Yuanta Financial Holdings, which holds HTC shares, told the Journal. "But they have made improvements in recent months, such as streamlining its product line."
HTC's sales in May came in at close to $970 million, its highest monthly revenue in 11 months. HTC has indicated that its second-quarter revenue will be higher than the weak first quarter thanks to the One, which has received extremely positive reviews but faces a tough landscape filled with the likes of Samsung's Galaxy S4.
Meanwhile, HTC said it slashed its executives' total compensation by more than half in 2012 to a total of $22 million.
Chou told investors to be "patient" with the company's turnaround strategy. However, according to the Journal, longtime shareholder Chang Kuo-yong passed out a list of demands including the replacement of Chou if sales don't grow by 10 percent for each of the next three months.
"I've lost several million New Taiwan dollars already in HTC," Chang said. "If the leaders can't fix it, they need to get out."
- see this WSJ article (sub. req.)
- see this separate WSJ article (sub. req.)
- see this The Verge article
- see this Bloomberg article
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