HTC confirms job cuts at U.S. unit as turnaround continues

HTC confirmed that it laid off workers at its U.S. unit on Friday. The job cuts come as the smartphone maker continues to struggle in its turnaround efforts.

The company said in a statement that the cuts were "a decisive action by HTC Corp (US) to streamline and optimize our organization and improve efficiencies after several years of aggressive growth."

HTC did not confirm how many employees were cut, but both The Verge and AllThingsD reported that, according to unnamed sources, HTC laid off 30 workers. The company's U.S. unit has a total of around 150 employees and contractors, so those cuts would amount to 20 percent of the team. AllThingsD reported that, according to an HTC representative, no executives left and there has not been any significant shift in the types or amount of work being done in the U.S. market.

In a letter about the layoffs obtained by The Verge, Jason Mackenzie, who HTC recently put back in charge of its Americas unit, told his team that it was "the most difficult day of my HTC career" and that "the stark reality is that our business results are not where we want them to be." He also said that HTC "would treat the impacted employees with the respect they deserved and provide them with resources to help bridge them to their next opportunity." Mackenzie said the layoffs were "part of a broader plan to simplify our organization, sharpen our teams focus, improve our speed in decision-making, and drive greater empowerment through our team, while reducing our overall cost structure."

HTC, once the darling of the smartphone market, has taken a precipitous fall during the past several years as competition has intensified and its products have struggled to stand out. HTC has been banking on its One smartphone, and the recently released One mini variant, to help turn sales around. So far, those efforts have proved largely unsuccessful despite widespread praise from analysts and reviewers for the products.

In August HTC warned recently that it could post an operating loss for the third quarter, which would be its first since it became a public company in 2002. The smartphone maker also said it will release more mid-tier products later this year to help improve its business.

HTC recently hired actor Robert Downey Jr., star of the "Iron Man" and "Sherlock Holmes" film series, to be the spokesperson for a new advertising campaign aimed at restoring luster to the company's brand. The company is also keeping its powder dry for a larger marketing blitz for the 2013 holiday shopping season.

HTC has suffered as its rivals, including Chinese manufactures such as Huawei and ZTE, have undercut its Android phones on price.

"HTC doesn't know how to make a cheaper phone," Gartner analyst C.K. Lu told the New York Times. "It isn't in their DNA. They don't know how to do it by cost, or differentiate. They usually downgrade from their premium segment and that doesn't work. It's a very, very old-fashioned approach."

"The markets are not here to forgive us," HTC CMO Ben Ho recently told the New York Times. "Investors want profits and we are being punished for that. Consumers and operators are not messed with. They will remember you forever."

"It is very challenging," he said. "I won't deny that. But management believes we have a good chance to come back. We aren't short of cash and we have no intent to sell."

For more:
- see this The Verge article
- see this AllThingsD article
- see this NYT article

Related Articles:
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HTC CEO Chou knocked by insiders who say he's part of the problem
HTC hires 'Iron Man' star Robert Downey Jr. to help revive brand
HTC denies rumors of company sale, launches share buyback plan
HTC warns of potential Q3 operating loss, plans more mid-tier products
HTC brings Mackenzie back to lead Americas unit, creates emerging devices biz

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