HTC Hits a Disturbing Low for Q1 2013 Net Profit

This morning, Taiwanese smartphone vendor HTC announced some predictably low numbers for its first quarter revenue and net profit. In fact, these were the lowest numbers for HTC since 2005. Profit was only $2.84 million, an almost inconceivable drop when compared year over year to its Q1 2012 numbers, when HTC’s income was $148.8 million. 

Revenue fell 37 percent to $1.42 billion from $2.26 billion a year earlier. Results were below the company's February guidance of between $1.66 billion to $2 billion.

This guidance was issued before HTC learned that critical parts it needed to complete assembly of its flagship HTC One were in short supply. HTC attributed the shortage to suppliers not perceiving HTC to be as valuable a customer as others, and had not foreseen any such problems occurring.

It’s unfortunate and it did affect both delivery of the HTC One into the all-important U.S. market, and clearly HTC took a hit on Q1 2013 revenue as a result.

In the face of monster competition from Samsung – not to mention Apple – HTC needs to get its flagship smartphone out the door. The firm was slated to have the HTC One go on worldwide sale in March. This would have been just in time to fall into first quarter figures.

Unfortunately, it had to delay the rollout until sometime in April.

Samsung has just released the Galaxy S4 – which will very shortly hit the U.S. – which puts even more pressure on HTC to get its devices into the hands of consumers. Because Samsung has a huge marketing budget and just as big brand recognition, we anticipate that the closeness of the release dates may take sales away from HTC.

The delay in being able ship out the HTC One has a big bearing on first quarter profit. As we've noted elsewhere, with the HTC One, HTC has stepped up its game substantially, having delivered a fully integrated smartphone that is fresh, clean, and for Android-based hardware, innovative.

The problem is that until it gets out the door and into users’ hands, no one will know about it – and in our opinion, it is a beautiful device users really need to get to know.

Just last week, Facebook announced Facebook Home. And at the same event HTC announced the new HTC First, a mid-tier device that will be delivered with a fully installed manufacturer's version of Facebook Home. As part of that announcement, Facebook noted that the HTC First is the first smartphone to deliver Facebook Home as a reference design.

For Facebook, this is an interesting collaboration with HTC and AT&T. The HTC First with Facebook Home will initially ship for $99.99 exclusively on AT&T.

Now that HTC is getting product ready to ship, it can win over many new subscribers. The HTC One, Facebook Home and HTC First are solid products with solid designs. The HTC One is a smartphone that can be a game-changer. We hope the company will have the opportunity to live up to the hype.