2012 wasn’t the best year for Taiwanese tech company HTC. Year-on-year profits fell by 79 percent as competitors like Apple and Samsung ate up its market share. Without enough marketing, even its efforts in the affordable space in the emerging markets were rather muted. Forecasters that expected some respite in Q1 of 2013 are also disappointed, as the company’s predictions for the three months leading up to March 31 look very gloomy. Among other things, the company expects revenues to slide 17 percent.
The revenue numbers in Q1 are now predicted as $1.69 to $2.03 billion. This is significantly lower than the $2.27 billion figure anticipated by analysts. Gross profit margins for Q1 are approximated at 21 to 23 percent, which is in the same region as the 23 percent gross profit recorded in Q4 of last year. Operating profit margins are also expected to fall to 0.5 percent from 1 percent at the end of 2012 – a deep plunge compared with the 7.5 percent operating profit seen at the end of 2011.
Surprisingly, HTC CEO Peter Chou remains upbeat about the rest of 2013. He accepted that the company did not live up to its standards in 2012, and ascribes this mostly to strong competition. Chou was quoted saying that HTC lost out mostly on the marketing funds. While their competitors were very resourceful and came with deep-pocketed marketing budgets, HTC itself was not aggressive enough on the marketing front.
This lack of communication led to the Taoyuan-based company losing its spot in the top 5 in the industry, while shipments fell by 25 percent according to an IDC report. In the Q4 of 2012, HTC was able to hold on to only 4.3 percent of its previous market share.
The company still sees the low-cost end as its savior. HTC Chief Financial Officer Chia-Lin confirmed to investors that it will offer new affordable smartphones in order to bring these dismal numbers back up. China is its primary target and it is planning on going lower than the cheapest Chinese phones. Currently the most inexpensive smartphone in China costs $320, but Chia-Lin asserted that HTC is willing to beat that by at least 50%. He was quoted claiming that there is still room to play in the Chinese market, but the company would not go lower than $160.
