HTC Returns To The Red In Loss-Making Q2

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No turnaround for Taiwanese mobile maker HTC which is predicting another loss-making quarter, releasing preliminary results for its fiscal Q2 today.

The Android OEM says it expects to make an operating loss of NT$5.14 billion ($166M) on unaudited revenue of NT$33.01 billion ($1.07BN) for the quarter ending June 30. Net loss before tax is around $256M, after tax it’s $260M. EPS is reported as -NT$9.70.

HTC reported its first loss-making quarter in October 2013, as its business was squeezed into the red by fierce competition in the Android space, especially by the might of Samsung’s massive marketing machine.

HTC pledged to focus on mid-tier devices in a bid to drive uplift via volume sales. However it’s now lodged between something of a rock and a hard place, with ongoing competition from Samsung, plus the rise of lean newcomers like China’s Xiaomi which are aggressively squeezing handset prices further while also targeting mid-tier buyers. The affordable space where HTC hoped to play is fast becoming as competitive as high end handsets. And things are only likely to get worse.

Prior to its latest loss-making quarter HTC had managed a run of positive quarters — including a slender profit at the back end of its fiscal 2014. But it’s prior four positive quarters were showing shrinking net profits (below) so today’s return to the red is not a surprise.

  • Q1,15: NT$0.36 billion
  • Q4,14: NT$0.5 billion
  • Q3,14: NT$0.6 billion
  • Q2,14: NT$2.3 billion

Last month HTC denied a report that its business is an acquisition target for Asus but today’s quarterly results will likely intensify speculation about the future of the company.

Earlier this year HTC finally replaced long time CEO Peter Chou with Chairwoman Cher Wang, in its biggest exec shake-up yet, saying she would take up a product development role.

In recent times the company has also sought to diversify in terms of the devices it makes, announcing a push into virtual reality with its Vive headset, via a partnership with Valve, and also launching a smartphone camera accessory. However such experimental hardware categories aren’t going to deliver a short-term profit boost to a business that’s once again losing money.