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HTC Earnings Slide Down in Q2 2012

HTC recently announced its earnings for the second quarter of 2012, or between April to June of this year. The Taiwanese company earned US $3.05 B or NT $91 billion in revenue and $275 M or NT $ 8.2 B in income. Meanwhile, it raked in US $248 M or NT $7.4 B in net profit, amounting to a drop of 57 percent than the company’s NT $17.52 B profit in the same quarter last year.

In a nutshell, the figures are quite dismal, but are in fact congruent with HTC’s predictions. Earlier this year, HTC forecasted slightly higher revenue of US$3.56 billion or NT$105 billion. By comparison, the company earned NT$67.79 B in the preceding quarter.

HTC’s revenue is low compared to the US$585.1 M or NT$17.5 B profit it gained during the same quarter last year. However, it is a bit higher than the NT$4.47 B it gained during the first quarter of the year. Earnings had also been predicted to fall down to as much as US$275 M or NT$8.25 B.

 

HTC identifies several factors that contributed to these figures. One is pressure from both manufacturers for the the high-end market segment such as Samsung Electronics and Apple, as well as from China-based phone makers like ZTE and Huawei targeting the lower end of the market. Another factor is the weakening European economy which is causing the company’s sales to go down in the region. The third quarter of the year, which had been usually a lucrative season, is not expected to bring as much profits this year. Carriers, likewise, are reluctant to provide subsidies given the economic climate. Still another blow comes from the banning of the EVO 4G LTE and the One X phones in the US.

To cope with these problems, HTC has introduced new phone models. Furthermore, it recently forged a partnership with Beats Audio that could help the company offer better music solutions on their devices.

HTC has a long way to go if it wants to regain its former financial success. It would take a lot of will and strategizing on the company’s part to develop attractive products in spite of the many challenges it faces today.