Taiwan smartphone company HTC released its fourth-quarter earnings, which were awful. They show how rapidly the company is losing ground to Apple Inc. (NASDAQ: AAPL) and Samsung. With each progressive quarter of poor results, HTC’s chance to remain a competitive force in the smartphone market continues to disappear. As a matter of fact, at this point that chance already has been destroyed.
[U]naudited consolidated results for 4Q 2012. For the fourth quarter of 2012, total revenues reached NT$60.0 billion. Unaudited operating income was NT$0.6 billion, net income before tax was NT$1.1 billion, net income after tax, excluding minority interest, was NT$1.0 billion, and unaudited earnings per share after tax were NT$1.21 based on 831,227 thousand weighted average number of shares.
The Wall Street Journal points out that this is the fifth-consecutive quarter of profit drop, and the dead spin has dropped the number to 2006 levels.
HTC has more than one problem, but its primary issue is the lack of a successful flagship smartphone that global consumers view as directly competitive with the Samsung Galaxy S III and Apple iPhone 5, which are considered the gold standards.
Without an immensely popular product, HTC cannot go to carriers and get premium display in stores, at websites and in advertisements. Carriers readily promote the iPhone 5 to drive traffic to their retail outlets, both online and in stores. The iPhone is a magnet for consumers to buy two-year subscriptions, which are the key to phone company cellular division profits.
Walk by almost any AT&T Inc. (NYSE: T), Verizon Wireless or Sprint-Nextel Corp. (NYSE: S) store front and notice which phones are highlighted. In very few instances will this be a product from HTC, LG, Motorola or Sony Corp. (NYSE: SNE). The smartphones from this set of manufactures are available inside the stores, but most buyers have made up their minds about which products they want before they pass through the doors.
HTC can be added to the list of the smartphone walking dead, which has grown increasingly longer over the past year.
Douglas A. McIntyre