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HTC Posts Record Loss, Revenue Down 29%, Google Deal To Lift Q1

HTC has posted its biggest quarterly net loss in company history – a whopping  NT$9.8 billion [~US$3.3 million] after tax. The Taiwanese company claims earnings were impacted by “competition, product mix, pricing, and recognised inventory write-downs”.

For Q4Y17 [October – December], HTC posted a ~30% drop in revenue to NT$15.7 billion [~US$540 million].

Operating margin notched -60.8%. The result follows an operating margin of -20.9% in Q3Y17, and -16% in Q4Y16.

The company’s smartphone division has been in particular strife, following stiff competition from Samsung, Apple and Huawei.

Reflected in its earnings result, HTC has also decreased spending on sales/marketing and R&D in recent years, following several consecutive periods of declining revenue.

As previously reported, in February HTC’s Global Phone Chief announced his resignation, with no replacement figure named.

HTC is hopefully for a rebound in Q1Y18 [January – March], following the booking of its US$1.1 billion deal with Google, which concerned the acquisition of half its R&D smartphone team. The deal finalised in January this year.

Speaking about the Google deal, HTC claims some funds will be used on “emerging technologies”:

“HTC successfully completed the US$1.1 billion business cooperation agreement with Google at the end of January, and the gain related to the transaction will be recognized in Q1’18, enabling greater investment in emerging technologies, which will be vital across all of our businesses and present significant long-term growth opportunities”.

Consensus is, Google wants to mimic the success of Apple, and control both the software and hardware used in its premium Pixel smartphones.

 

Disclosed in its earnings report, HTC states it has undertaken a strategic review of its business, to be better coordinate the smartphone and virtual reality divisions:

“HTC has also undertaken a strategic review of the business to optimize teams and processes, and bringing the regions under common leadership for greater coordination of the smartphone and virtual reality businesses, as well as enabling greater leverage of our extensive expertise across the group.”

“With a clear product focus and a series of measures in place to enable stronger execution, HTC is positioned well for another strong year of innovation at the forefront of its markets.”

The Taiwanese company remains committed to the success of its Vive VR (virtual reality) headset. Its Q4 earnings reports comes just days after pre-orders opened for its new Vive Pro HMD.

“There has been significant innovation over this period, with the launch of the VIVE Focus standalone VR system in China, and the VIVE Pro premium PC VR system in January earning 29 awards and wide media acclaim at the Consumer Electronics Show (CES) in Las Vegas in January 2018, including many ‘best in show’ awards”, affirms HTC.

HTC also recently launched its new U11 Life smartphone, said to offer aspects of its well-received U11, at a more affordable price.

View HTC’s full Q4Y17 earnings report here.

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