HTC, who don’t have the same brand appeal as Apple and spend less on marketing their products than Samsung, is struggling with the Company admitting that sales have slumped 22% in the last quarter, and that their new 4G Velocity has a battery problem. Last night the Taiwanese Company said it expects revenues to fall a further 35.5% in the first quarter of 2012. A new “hero” phone is tipped to be launched this month at the World Mobile Congress in Europe.
HTC executives who prefere to only talk at press conferences have not returned our calls.
In the past HTC has launched several different models in an effort to be competitive across multiple carriers. A former senior executive at HTC Australia said “There was a different model for each carrier and this confused consumers”.
Desperate for success in the new LTE 4G market HTC has tried to use their new Velocity 4G smartphone as a hero model despite the fact that it has poor battery life, and is thicker and heavier than 3G models from the likes of Samsung and Apple.
HTC admit that sales of their 4G smartphones have not been satisfactory in part because of the short battery life problem.
Mr Yung said “Consumers have not switched to the faster 4G networks as quickly as HTC had expected”
However, Mr Yung stressed that the company’s big drop in revenue for the first quarter “is not normal” and that sales would pick up again, and profit margins return to early-2011 levels by the middle of this year.
The Financial Times said that analysts questioned during the overnight results conference call whether HTC was being too optimistic in expecting to regain its footing by the middle of this year. HTC’s January revenues were just T$16bn, less than half of January last year.
CK Cheng, analyst at CLSA, said that while it is unlikely that HTC’s operating margins will return, the company’s sales will probably rebound when it launches its new phone next month, as neither Samsung nor Apple are expected to unveil their new phones until later this year.
“In smartphones, each year is like starting a new round over again, so HTC still has a chance. They’re still in the game,” Mr Cheng said.
It’s going to be a transition period because their newer models were selling badly and they’re awaiting fresh products,” said Aaron Jeng, who rates the stock “neutral” at Nomura Holdings in Taipei. “We need to wait for next quarter to see how those new handsets perform in the market”.