HTC's November Revenue All But Confirms Dire 2018


The numbers are now in and November is yet another month in which HTC has shown that it is far from turning around its recent financial troubles. The company has today posted a brief note (as it does every month) on its unaudited consolidated revenue for the month of November 2018, declaring NT$1.47 billion. In US talk, this translates to about $48 million. A far cry from the figure noted for November 2017, which in itself was already of concern due to it being down from the year before.

HTC's never-ending revenue drop

Each month when this same note appears the headlines read the same thing – HTC revenue down year-over-year. To the point where it is barely even news anymore with the industry now tending to focus not on whether there's a drop, but more simply, how much of a drop has occurred. This is typically defined as the year-over-year change and if taking this approach with November, then the $48 million now declared marks a decrease in the region of 70-percent. To put this into a more digestible figure, compared to the $48 million earned in November 2018, HTC earned just over $180 million in November 2017. Which itself represented a year-over-year drop of just over 26-percent. In other words, HTC's year-over-year decline is not only continuing, but it's getting alarmingly worse.


Monthly, things appear slightly better

If you were to only look at HTC's November revenue in relation to the previous months, then the picture is not quite as bad considering the company announced $42.6 million in October 2018, and $40 million for September. On that basis, November's $48 million actually means an increase month-over-month. Well, at least for the past couple of months as the company announced $45 million in August 2018 which although was also down year-over-year means there's was another sharp decline between August and September – with things marginally climbing on a monthly basis since.

However, to focus on the slight month-to-month increases as some sort of return to the path of glory would be grossly misinterpreting the bigger picture. As regardless of the small by comparison increases over the last couples of months, the one consistency every month is how drastically lower 2018's monthly figures are compared to the year before. For example, the 70-percent drop in year-over-year for November is not that much different to the year-over-year percentage drops for October, September, or any of the other months in 2018 for that matter. And this is most apparent when you then look at the cumulative effect of all of these monthly year-over-year drops. As while HTC announced $2 billion in total revenue for the whole of 2017, the current monthly figures for 2018 combined indicate the company will find it difficult to even break the $1 billion marker by the end of this year – by difficult, near impossible. Not to mention, one would naturally expect an uptick in November simply by virtue of this being the start of the Holidays season, aka buying season, for consumers in a number of countries, and although there is an uptick between October and November, it is largely negligible.


(Almost) $1 billion is still good, right?

Sure, it's a big number on its own, and one many companies would be more than happy to be seeing at the end of their year. But HTC is not like those companies (well, it is now) and you only have to look back a few years to see how staggering small that figure is in the grand scheme of things. Take 2011 for example, when HTC announced revenue of $15 billion bolstered by significant smartphone sales. Since then, however, that number has continued to drop every year and at an accelerating rate with that $2 billion noted for last year, and November's figure now all but confirming less than half of that will be declared for this year. If you were to look back over the years, you would have to go back to around 2009 before you started to see a similar level of revenue to what HTC is bound to announce for 2018.

The problem?


That's the big question HTC needs to address, and soon, although whether it will or not remains to be seen. In fairness HTC has made changes and some of them have helped to some degree as the company has seen recent success through its VR endeavors, although this is an area which is expected to become worse for those involved going forward as the initial bubble effect often seen with new technologies starts to subside. In addition to the increased competition which is already being seen in 2018 which helps to not only drive down prices, but with down prices, comes down revenue. What's much more of a problem is in spite of those boosts via VR, the company's smartphone division has failed to see any significant traction over the last few years, even though HTC has continued to output new devices each year. In fact, while each year usually brings about the suggestion this might be the last year for the company's smartphone portfolio, indications already point to 2019 not being that year with HTC already tipped to release new devices. At least one of which is likely to be a 5G phone, and this will be in addition to the now-confirmed 5G hub the company is working on with Sprint and Qualcomm.

This itself might be one of the issues that is compounding the problem for HTC as the smartphone-maker continually seems to be looking to niche markets to sell to. Besides its past association with the Pixel line, 2018 saw the company introduce a cryptocurrency phone and now with the suggestion of 5G solutions on the way, HTC might be focusing too much on small markets when it should be focusing more on products it can sell to mainstream buyers. After all, a niche product will mean niche sales and while that approach is good for keeping the lights on, it's not going to translate into anything that helps to turn the tide HTC is now swimming against. Yes, 5G will become the mainstream in due course, but 2019 is not expected to be the year when that happens. If anything, 2019 is likely to be the time you don't want to buy a 5G device, so it remains to be seen why HTC, in its current and worsening position, will be selling them.