HTC Lowers Q2, 2015 Earnings Estimate

HTC Logo AH10

Taiwanese smartphone manufacturer HTC has revised its Q2, 2015 guidance to indicate an expected net loss of $257 million to $291 million on an expected revenue base of around $1.1 billion for the quarter. HTC says, this is a result of lower than expected demand for its high-end devices, and weak sales in the all-important Chinese market. The company is also writing off $93 million as a one-time loss for “idled assets and some prepaid expenses”. This loss ends a string of four successive quarters of profitability for the company. HTC meanwhile also revised its margin estimate downward to 19-19.5% from the previous estimate of 23-23.5%. HTC’s revenues have dropped significantly on a month-on-month basis as well, and the company only had sales of $347 million in May 2015 as opposed to $434 million in the month of April, which is a 20% sequential de-growth. That particular piece of statistic is fairly damning when you consider the fact that last April was the worst April the company had in six years. The company now says it is “enacting measures to further improve operating efficiency”.

The shares of the company has been on a downward spiral ever since early March, when the company released the One M9 to a less than generous reception. The squeeze at the higher-end from competitors like Samsung and Apple, and its inability to compete with low-cost manufacturers in China and India for the middle and entry-level segments in those countries are thought to be the major reasons behind the company’s recent slump.

The company has already announced multiple other high-end devices since the launch of the One M9, including the One M9+ and the One E9+. Reports also say that the company is looking to release its next generation flagship device earlier than expected – maybe even as early as late this year – to ward off some off the ill-effects of the One M9 failing to take off. HTC is also looking to delve into new product categories, and is releasing new products including the new Vive headset it has developed along with Steam. Only time will tell whether its newer releases will be able to see it through the troubled waters, but HTC badly needs a hit sooner rather than later.