Another bad-news day for HTC, which is sorely in need of one or two killer, new products to turn around its fortunes in the ever-competitive world of smartphones: in a trading update, the company’s sales for the month of January 2012 were down by more than 50 percent compared to a year ago, with the news coming on the same day that the company missed Q4 analyst forecasts.
Taken together, the two highlight what a change HTC has seen since 2010 — when, by some estimates, the company was making four out of the top-five best-selling Android handsets in the U.S. (the Hero among them), at a time when Android was fast becoming the most-popular smartphone platform worldwide.
In a trading update issued today, HTC said that it made revenues of $564 million ($16,615 million Taiwan dollars) in the month of January 2012, compared to $1.2 billion (NT$35014) in January 2011. That represents a decline of nearly 53 percent.
HTC did not note how that figure worked out to actual unit sales, but it shows that the company is still suffering from some of the same issues that affected its Q4 earnings, covering the period ended December 31, which were also out today.
In those, HTC noted that revenues were down by 2.49 percent to NT$101.42bn ($3.54 billion) — their lowest point in over a year. Overall annual revenues, however, took in some of HTC’s stronger performance from earlier in 2011: up 67 percent on 2010 to NT$465.79 billion ($15.8 billion). Both the quarterly and annual revenues missed analysts’ expectations, based on a Yahoo poll. Operating profit and margin, as well as gross margin, also declined.
As with the January figures, HTC also did not provide any figures of how these numbers worked out to unit sales.
HTC earlier in 2011 had already warned the market that it would have to revise down its projected earnings because of market pressures, but another significant issue is that HTC didn’t put out any new handset models during the crucial holiday-buying season, effectively dying a kind of death at the retail level compared to competitors like Apple (NSDQ: AAPL).
Not only did Apple make a timely release of a new iPhone model, the 4S, but it turned out to sell so well that Apple, by some estimates, saw the biggest growth in market share of any handset maker in the last quarter.
And it’s difficult to say that this is an issue with Android per se, when Samsung, a competitor of HTC’s also making Android devices, appears to be going from strength to strength in terms of its market progress, reporting a sales rise of 30 percent in its last quarterly earnings.
HTC, for now, says these are “short-term difficulties” with their “brand strength, innovation, and design/engineering capabilities” helping them longer-term. But, as we’ve seen with others in the smartphone world, that promise can only hold for so long.
In reality, HTC needs to get its act together and fast. For Q1, it expects revenue to be in the region of NT$65-70 billion “due to product transition,” it writes. But at a time when the smartphone market continues to grow, that is a massive decline on Q1 2011, when HTC posted revenues of NT$104 billion.
On top of that, the company’s product margin appears to be swiftly nosediving: it expects a margin of 7.5 percent in Q1, down from this last quarter’s 12.71 percent and less than half of what HTC posted as an operating margin a year ago: 15.81 percent. Gross margin, it forecasts, will be 25 percent: also a fall but not by nearly as much compared to 29.25 percent margin a year ago.