HTC profit down 83 percent from last year despite flagship launch
HTC has just announced its unaudited results for the second quarter 2013, and they're not pretty. Despite launching a much-lauded flagship smartphone, the HTC one, the company made just NT$1.25 billion (roughly $41 million) …
Context & Ripple Effects
HTC entered 2013 after its lowest net income in eight years and then recorded only $2.88 million in first-quarter profit. The second-quarter result extends a decline that was already visible in the prior year's profit contraction, rather than establishing the HTC One as a financial reset.
The company had also faced phone delays and the departure of COO Matthew Costello before reporting these results. That makes execution, alongside demand for its flagship lineup, central to HTC's near-term position.
First-order effects
- HTC's NT$1.25 billion second-quarter profit leaves the HTC One launch insufficient to reverse its earnings slide, increasing pressure on the company to convert flagship demand into sales and margin.
- The result intensifies the operating challenge facing HTC after reported phone delays and Costello's planned departure.
Second-order effects
- HTC's newer Butterfly s launch carries greater weight as the company seeks to broaden its flagship sales beyond the HTC One while addressing the execution problems tied to earlier delays.
Third-order effects
- The sequence from 2012's profit decline through the weak first quarter of 2013 suggests that HTC's recovery depends on sustained portfolio execution, not favorable reception for one handset.
The trend: HTC's results illustrate how a handset maker's flagship launches must translate into dependable sales and operations before they can restore profitability.