HTC posts $62M loss for Q1 ahead of One M8's debut

HTC reported its second loss in the last three quarters, as the company continues to slump. However, the smartphone maker is banking on sales of the One M8, its newest flagship smartphone, to help it charge back onto sounder financial footing. The M8 was released at the very end of the first quarter.

HTC's One M8.

The company reported a net loss of $62 million in the first quarter, wider than the loss of $56.5 million an average of 13 analysts had estimated, according to Bloomberg. In the year-ago period HTC had a profit of around $2.8 million. HTC posted a net profit in the fourth quarter mainly on its sale of its stake in Beats Electronics.

Meanwhile, sales continued to fall at HTC, and revenue for the quarter dropped to $1.09 billion, down from $1.41 billion in the year-ago quarter. Analysts polled by Bloomberg had expected $1.17 billion in sales. HTC itself had forecasted $1.12 billion to $1.18 billion.

On March 25, HTC introduced and started selling the One M8, the successor to last year's One M7 smartphone. The company hopes that the device's updated software, camera and industrial design will help lure buyers as well as its strong carrier distribution, especially in North America. HTC hopes it can gain inroads on Samsung Electronics' Galaxy S5, its main competitor for the moment in the high-end smartphone market. HTC is also using an unconventional marketing campaign aimed at leveraging Internet buzz about the M8 by telling potential buyers not to take HTC's word for it on whether they should buy the phone, but to simply "go ask the Internet."

"The company expects to see positive trajectory of its revenue in April from March and forecasts quarter-on-quarter revenue growth in the second quarter," HTC said in a statement. The company expects sales to come from new products, including the One M8 and mid-range Desire 816.

In addition to the One M8, HTC is aiming to use its Desire line to grab market share, especially in China.

"New products only came out in March and sales appear to be weaker than even HTC expected," Calvin Huang, an analyst at SinoPac Financial Holdings, told Bloomberg. "We need to wait until May to see whether sales throughput for M8 is as strong as they hope."

So far, the One M8 has drawn significant praise, even over the One M7, which was widely lauded by analysts and tech reviewers but failed to improve HTC's sales. CNET gave the new One M8 four and a half stars out of five, calling it "a stunning sequel" to the One M7.

"The M8 is good, but it's not as revolutionary as the previous flagship," Yuanta Securities analyst Dennis Chan told Reuters. "Everyone is watching the second quarter to see how it sells."

Indeed, Deutsche Bank analyst Birdy Lu told Bloomberg that "the important thing to watch will be whether they can sustain sales into the third month after M8's product release."

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

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