HTC reports weaker July sales as shares tumble

HTC posted a 45 percent year-over-year drop in July revenue and the company's falling stock price shaved more than $1 billion off its market capitalization during the past few days.

The Taiwanese smartphone maker, while still profitable, has seen its sales slump--the company warned last week to expect weak results in the third quarter. HTC posted revenue in July of around $834 million, down from $1.5 billion in July 2011 and also down from around $1 billion in May 2012.

The weak performance, spurred by slower sales in the U.S. market and Europe, has pushed HTC's shares down. The company's shares in Taiwan fell by 7 percent today after dropping nearly as much yesterday; so far this year HTC's shares are down 50 percent.

HTC had hoped that its One series of Android phones, introduced at the Mobile World Congress trade show in February and focused on audio quality and improved camera functionality, would help it revive its luster as a premier smartphone maker. So far though that strategy does not appear to be taking hold. 

According to research firm IDC, HTC shipped 8.8 million smartphones in the second quarter, down from 11.6 million in the year-ago period, and its global smartphone market share dipped to 5.7 percent from 10.7 percent a year earlier. Much of HTC's business has been sucked up by Samsung Electronics, which has risen to become the world's leading smartphone and handset vendor.

HTC CEO Peter Chou has said emerging markets like China and India are where the company will look to deliver growth. The company is ramping up its marketing and distribution efforts there.

"The HTC [One X] is a very good product, but consumers are ignoring it over Samsung's Galaxy S III because of the brand," Gartner analyst Carolina Milanesi told Reuters. "I feel like they have to step up their game, they cannot afford to operate the way they did four years ago when they were the new kid on the block. It is almost like a kid going to junior high to college and still playing around as it was a kid."

Meanwhile, according to a report in DigiTimes (which has a spotty record with the accuracy of its reports), HTC is prepping a high-end, 5-inch "phablet" product with a 1080p screen resolution for a September release. Samsung has had much success with its own phablet product, the Galaxy Note, and is rumored to be preparing a new model for the fall as well. 

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

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