HTC feeling the heat of competition, profit dips 58%
Submitted by Rahul K. Chaudhary on July 7, 2012 - 11:28am
HTC's net profit for the second quarter dipped 58%, as compared to a year earlier, because of extreme competition and fading global economy. In a recent statement, HTC revealed that its unaudited profit for the second quarter was $7.40 billion Taiwanese dollars (US$247m); with net revenue cascading 27% from a year earlier.
HTC had gradually been sprawling out in the market
However, the decline in sales and profits came as no surprise to HTC as the company was already expecting the fall. But still, the results of second quarter, which gave HTC a revenue collection of just 91 billion Taiwanese dollars, are flooding the Company with frustration and disappointments.
HTC, the Taiwanese smartphone behemoth, has apparently got a hit from the blockbuster sales of Galaxy S III smartphone which drove Samsung to a record quarterly profit. Earlier, HTC got a setback from the International Trade Commission which blocked the HTC One X, one of the best smartphones in the market, for violating Apple’s patents.
Hoping against the hope for increase in shipment
Peter Chou, the Chief Executive of HTC, is overwhelmed with enthusiasm regarding the scheduled launch of HTC’s new smartphone models later this year. But, an increase in shipment is a must if the Company wants to make one bit of an impact on its rivals.
The Company is hopeful that the launch will help a great deal in increasing sales to revive the overall profit of the Company by the fall of this fiscal. The biggest reason to lament for HTC is that its business solely depends on mobile phones, unlike Apple and Samsung which are leaders in consumer electronics too.
No sigh of relief ahead
The rough run of HTC may continue for the third quarter as well since its biggest rivals, Samsung and Apple, as set to come up with new smartphone models. HTC strongly relies on the developing economies in Asia for sales of its smartphones, though the majority of Asian markets are small and not much profitable.
Also, in China and the majority of Asian smartphone hubs, HTC is facing fierce competition from a number of local smartphone makers like Huawei and ZTE which frequently come up with new high-end models at cheaper prices.
In US, the condition is no better and it will certainly force HTC to rethink, redesign and replay its strategies.
