HTC's tagline is quietly brilliant. The smartphone maker's second
quarter results and third quarter outlook indicate that the company may
become quietly irrelevant.
The Taiwanese company's second quarter results
missed estimates with a net profit of NT$7.4 billion on revenue of
$91.04 billion. (That's But the outlook for the third quarter was more
worrisome. HTC projected third quarter revenue of NT$70 billion to $NT80
billion.
In other words, HTC launched a series of new products in the second quarter -- HTC One, Desire, EVO 4G LTE and Droid Incredible 4G LTE and barely held the fort. HTC's outlook indicates that those new devices are aging rapidly.
Barclays Capital analyst Dale Gai said that HTC could be "quietly
irrelevant" if it doesn't get its act together. Meanwhile, HTC offered
little direction on strategy or plans to cut costs. Gai said that HTC
may lose cloud with carriers over subsidies and mostly compete on price.
The issue for HTC is that it just can't compete with Samsung on scale
or marketing. Like Nokia and RIM, HTC is looking at being collateral
damage as Samsung and Apple form a smartphone duopoly. As
Knowledge@Wharton noted, the smartphone industry is due for a shakeout.
Macquarie analyst Daniel Chang handicapped HTC's outlook and earnings on Friday:
As we pointed out, Apple and Samsung will have a combined market
share over 70 percent in 4Q12 if our and the street’s forecasts of
iPhone shipments
(60m units) and Samsung sales (60m+) are correct. This implies HTC may
face a larger drop in shipments in 4Q12 since HTC’s target market
overlaps in various regions with these two giants.
HTC's master plan is to grow its share of China, increase marketing
and sales efforts in Europe and North America and continue a push into
Asia's various markets.
Simply put, HTC's playbook will look more of the same. HTC has plenty
of cash, but so it won't disappear. Instead, HTC could be on the path
toward being another irrelevant smartphone maker without a dramatic
move.
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