Posting a below par operating profit of just $43 million in the quarter up to March has made Taiwanese manufacturer HTC an acquisition target. With revenues down 37% for the quarter ending in March, the company has hit a new obstacle in its plans, courtesy the many manufacturing problems it is facing. The shortage of cameras for its latest flagship phone the HTC One meant that the phone could be only launched in three countries compared to 80, which the company had originally aimed for. This is not the end of problems for HTC, as these delays will only bog down the company in the near future as it struggles to compete against the likes of Samsung’s Galaxy S IV which is due to hit store shelves next week.
These developments further worsened the situation of chief executive Peter Chou; who reportedly told the company board that he would go to the extent of resigning from his position if the HTC One is a failure. Analysts believe that the possibility of the company becoming an acquisition target is very high given its worsening cash flow and market bends towards expensive phones from Samsung and Apple. The quarterly figures were well short of the modest estimation that the company had forecasted for this quarter.
The company estimated revenues at NT$50 to NT$60 billion in February. However, it ended up earning only NT$43 billion in revenue for the first quarter this year. An analyst at Enders Analysis estimated that the company shipped 3.5 to 4.5 million phones this year. Another analyst at research firm Gartner suggested higher shipment estimates ranging from 7-7.5 million. These estimates were released because the company refrained from releasing any figures on its behalf. A higher shipment figure would imply a lower selling price per phone and thus amount to lower profits.
This time last year both Sony and HTC launched potential products which went nowhere. Everybody is of the opinion that the HTC One presents itself better in comparison the Galaxy S IV. However, without the right marketing and sales and commission budget, these phones will not reach the required audience. Exceptional hardware is always appreciated, but manufacturers must realise that promotion is nearly as important as making a good product. Marketing forms an essential backbone for a product to be successful. Analysts are of the opinion that potential suitors are waiting to make a pitch for an acquisition bid in due time, one of which is rumoured to be Lenovo.
