HTC earns small profit in Q1 as sales of One M9 smartphone begin

HTC eked out a profit for the first quarter but the company still faces strong competitive headwinds as it looks to regain sales in the smartphone market and push beyond phones.

The Taiwanese company posted an unaudited net profit of around $11.6 million (NT$360 million) in the first quarter, marking the company's fourth straight profitable quarter. The result was a significant improvement from a net loss of around $60.5 million in the year-ago period but also was weaker than the $15 million profit the firm had in the fourth quarter. Nevertheless, the profit figure still beat the $5 million expectation of an average of analysts, according to a ThomsonReuters poll.

HTC said sales in the first quarter clocked in at $1.33 billion, up from $1.06 billion a year ago but down from $1.54 billion in the fourth quarter.

According to the Wall Street Journal, some analysts think HTC has benefited from its midrange Desire series of phones designed for emerging markets. Higher sales volumes of those phones, which borrow the design language of its flagship One series but have lower-end specifications, could help HTC cut production costs.

HTC is facing a time of transitions and new product rollouts. Last month the company named Chairwoman and co-founder Cher Wang as its new CEO, replacing longtime CEO Peter Chou. However, Chou is not leaving the company. Chou will lead HTC's "Future Development Lab," where he will be focused on future product development and growth opportunities for the firm. 

Additionally, HTC and its carrier partners will start selling the company's new flagship smartphone on Friday. The phone has met with mixed reviews, including many who praise its design but say it is not different enough from last year's One M8. Some reviewers have also dinged the M9's camera as being inferior.

In addition to competing with Apple's (NASDAQ: AAPL) iPhones, HTC is also going head to head with Samsung Electronics, which will also release its flagship Galaxy S6 and S6 Edge this week.

To combat that, HTC announced it will offer a phone-replacement service to U.S. One M9 users at no additional cost. HTC hopes that the program and its benefits will be something that will lure customers and that no other smartphone maker can offer. Meanwhile, HTC has also been pushing into new categories like handheld video cameras and virtual reality headsets in a bid to diversify its revenues.

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

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