HTC's Q1 2017 Earnings Sees Shares Rise, Prospects For AR

HTC's Q1 2017 earnings per share and gross margin have topped earlier estimates from analysts and led to a rise in shares. A new report discussing this also mentions the possibility of the company working on new AR technologies. Earnings per share forecasts were for a loss of TWD2.80 while the actual figure showed a better than expected TWD2.47 loss instead. However, the gross margin result was better still, as rather than the predicted 14% the figure went up to 16.3%. That was the best result in a year and led to a 6% rise in trading early on Wednesday, although shares in the Taiwanese electronics company over the last year are still down 3%. Figures for the beginning of Q2 are less notable, as month-on-month sales for April fell 9%. Nevertheless, HTC’s current plans for high-end smartphones are said to be the reason for the gross margin increase, and it’s anticipated that the new high-end HTC U 11 smartphone that will be officially unveiled at an event on May 16 will lead to further growth.

David Dai of Bernstein spoke about HTC’s strategy to reduce the number of its new smartphones in 2017 to no more than 6 or 7, rather than the 15 new smartphones that it offered last year. In Q1 this has led to fewer costs on marketing and sales with a QoQ fall of 20% in such expenses. Further to this Dai also discussed HTC’s focus on virtual reality (VR) and augmented reality (AR) glasses. Currently, HTC is making headway with virtual reality technology but there has been mention of an alternative application being developed over the next few years. This indicates the prospect of advances with AR as they share similar technologies. Many of the big smartphone manufacturers are presently looking towards the future of mobile devices. For example, Sony’s president recently discussed changes in the industry and the company’s plans to increasingly focus on VR technology. Facebook’s Mark Zuckerberg also spoke last month about the company’s future strategy for AR technology. Therefore if HTC could become an innovator for AR solutions this would bode well for the company’s prospects, although at this point it remains to be seen.

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