HTC profits plunge 57% in face of Apple injunction, European struggles

Posted:
in iPhone edited January 2014
While Apple's competitor Samsung expects to see record profit from the June quarter, rival HTC is struggling in the face of disappointing sales in Europe and an Apple injunction that delayed the launch of new handsets in the U.S.

HTC expects that its second quarter net profit will drop by 57 percent to $247.7 million in the June quarter, less than half what it earned in the same period a year prior. That number was also significantly below what market analysts expected.

The Taiwanese handset maker blamed poor economic conditions in Europe, according to Reuters, for its disappointing sales. In addition, HTC saw some of its phones held up by U.S. Customs after Apple was awarded an injunction for patent infringement.

While HTC struggles, another smartphone maker that primarily sells Android handsets, Samsung, expects to see record profits from its June quarter. This week Samsung provided guidance for profits of 6.7 trillion won ($5.9 billion) from the three-month span, handily besting its previous record of 5.85 trillion won from the first quarter of this year.

While Apple and Samsung continue to see record sales, HTC has languished and failed to compete with the two companies in the high-end smartphone market. In April, HTC announced that its pre-tax profits fell by almost 70 percent, while total sales also fell by almost a third.

HTC One X
HTC's One X smartphone


According to IDC, HTC was the fifth-largest smartphone maker in the world in the first quarter of calendar 2012. Its 6.9 million shipped smartphones were behind Research in Motion (9.7 million), Nokia (11.9 million), Apple (35.1 million), and Samsung (42.2 million).

HTC hopes that its newly launched One X smartphone will give it some traction once again in the high-end smartphone market. It's an Android-powered device that features a 4.7-inch 720p high-definition display, with a 1.5 gigahertz dual-core processor and 4G LTE high-speed data connectivity.

While Apple and Samsung compete at the top of the market, an accurate comparison of actual smartphone sales is impossible, as Samsung does not provide such data. Apple discloses iPhone sales in its own quarterly earnings report, which the company will do again for its June quarter on Tuesday, July 24 at 2 p.m. Pacific, 5 p.m. Eastern.
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Comments

  • Reply 1 of 42
    solipsismxsolipsismx Posts: 19,566member
    Aren't they the 3rd most profitable handset vendor after Apple and Samsung? At least they are turning a profit.
  • Reply 2 of 42
    quadra 610quadra 610 Posts: 6,743member


    HTC isn't handling the thermonuclear war too well. 


     


     




    Quote:

    Originally Posted by AppleInsider View Post





    an accurate comparison of actual smartphone sales to end users is impossible, as Samsung does not provide such data. 





     


     


    I've always viewed this as ridiculously shady. Then again, it's Samsung we're talking about. They've turned deception and evasion into an art. 

  • Reply 3 of 42
    gatorguygatorguy Posts: 20,451member

    Quote:

    Originally Posted by AppleInsider View Post

    While Apple and Samsung compete at the top of the market, an accurate comparison of actual smartphone sales to end users is impossible, as Samsung does not provide such data. Apple discloses iPhone sales in its own quarterly earnings report, which the company will do again for its June quarter on Tuesday, July 24 at 2 p.m. Pacific, 5 p.m. Eastern.


    Apple's revenue is not reported as sales to end-users either. These two AI sentences are constructed so as to be misleading IMO.

  • Reply 4 of 42
    hill60hill60 Posts: 6,989member


    The One X has a quad core processor, the main thing against HTC is they can't compete against Samsung's hype.


     


    While they were focussing on Apple, Samsung basically left them with nothing but crumbs.


     


    The One X is every bit as good as a Galaxy S III.

  • Reply 5 of 42
    lkrupplkrupp Posts: 6,959member
    I find it very amusing that the Fandroids (really just Apple haters) move from one manufacturer to another depending on the proposed iPhone killer du jour. At one time Motorola was the be all end all of smarthphones, the one that would destroy Apple. Then as Moto started to trail off this crowd hitched their wagons to HTC. Now Samsung is the White Knight that will deal the death blow and save mankind from the walled garden. In the tablet world it was... hell, I don't even remember. Then it was the Fire, then the Galaxy Tab, now the Nexus 7. I wonder what happens when some of these manufacturers decide to go with yet another mobile OS. Rumors are flying that Firefox OS is around the corner. Samsung has its own OS if it wants to go that way. Fine and dandy but it all revolves around defeating Apple and taking that profit crown away.
  • Reply 6 of 42


    Apple reports the number of phones sold to customers, not "shipped" as other guys do.


    They are requesting regular reports from their local distributors. The distributors are interested in reporting the inventory correctly, because unsold units are subject of price protection (e.g. in case of a price drop or new model release). The unsold units are reported by Apple as channel inventory.


    There is still some margin of error because of second-tire resellers or something, but it is relatively small.

  • Reply 7 of 42
    uguysrnutsuguysrnuts Posts: 459member


    Which is why time and time again, this strategy has failed and will continue to fail.


     


    Quote:


    Originally Posted by lkrupp View Post



    I find it very amusing that the Fandroids (really just Apple haters) move from one manufacturer to another depending on the proposed iPhone killer du jour. At one time Motorola was the be all end all of smarthphones, the one that would destroy Apple. Then as Moto started to trail off this crowd hitched their wagons to HTC. Now Samsung is the White Knight that will deal the death blow and save mankind from the walled garden. In the tablet world it was... hell, I don't even remember. Then it was the Fire, then the Galaxy Tab, now the Nexus 7. I wonder what happens when some of these manufacturers decide to go with yet another mobile OS. Rumors are flying that Firefox OS is around the corner. Samsung has its own OS if it wants to go that way. Fine and dandy but it all revolves around defeating Apple and taking that profit crown away.

  • Reply 8 of 42
    blastdoorblastdoor Posts: 1,909member


    It would probably make sense for apple to lay off HTC for a while and focus more on Samsung. Seems like it's in Apple's best interest for the Android platform to be as fragmented as possible, without any one leader emerging. Taking down Samsung clearly needs to be job 1 for Apple. So far, the ace in the hole for Apple is the iPad. But it would be nice to see Apple get out in front of Samsung on smartphone sales and stay there. 

  • Reply 9 of 42
    eriamjheriamjh Posts: 1,114member


    Sold vs. shipped means nothing when it comes to profits.  Profits are profits.  Why is Samsung so profitable and HTC going down the toilet?  I admit, I know nothing of either phones, but is Samsung "innovating" far more than HTC or is HTC just failing to capitalize on the market due to lack of advertizing?  Poor carrier tie-ins?  Not enough sell-thru channels?


     


    Apple's profits are due July 27/28? and should wow us all.  I just hope their stock reflects that (I own some).

  • Reply 10 of 42
    tallest skiltallest skil Posts: 43,399member
    solipsismx wrote: »
    Aren't they the 3rd most profitable handset vendor after Apple and Samsung? At least they are turning a profit.

    They're one of only three that are.
  • Reply 11 of 42
    pokepoke Posts: 506member

    Quote:

    Originally Posted by Eriamjh View Post


    Sold vs. shipped means nothing when it comes to profits.  Profits are profits.  Why is Samsung so profitable and HTC going down the toilet?  I admit, I know nothing of either phones, but is Samsung "innovating" far more than HTC or is HTC just failing to capitalize on the market due to lack of advertizing?  Poor carrier tie-ins?  Not enough sell-thru channels?


     


    Apple's profits are due July 27/28? and should wow us all.  I just hope their stock reflects that (I own some).



     


    Mobile platforms tend to be winner-takes-all with one manufacturer dominating a platform (probably because there's no incentive for carriers to buy phones from different manufacturers when they all look the same and run the same software). For example, HTC was once responsible for 80% of Windows Mobile phones in the pre-Android era, despite Microsoft have many other partners. The best argument I've heard (from Horace Dediu) for Samsung's dominance over HTC is that as the smartphone market has rapidly expanded to greater volumes, HTC hasn't been able to match Samsung in distribution, so Samsung has managed to displace it as the go-to manufacturer for Android phones.

  • Reply 12 of 42
    quadra 610quadra 610 Posts: 6,743member

    Quote:

    Originally Posted by Eriamjh View Post


    Sold vs. shipped means nothing when it comes to profits.  Profits are profits.  Why is Samsung so profitable and HTC going down the toilet?  I admit, I know nothing of either phones, but is Samsung "innovating" far more than HTC or is HTC just failing to capitalize on the market due to lack of advertizing?  Poor carrier tie-ins?  Not enough sell-thru channels?


     


     



     


    I dunno, they all seem the same to me. Like HP vs. Dell vs. Acer.


     


    The Android OEM game is all about market flooding. 

  • Reply 13 of 42
    eldernormeldernorm Posts: 232member

    Quote:

    Originally Posted by Gatorguy View Post


    Apple's revenue is not reported as sales to end-users either. These two AI sentences are constructed so as to be misleading IMO.



    Actually, Apple sales for iPhone, iPad, etc are on one of the quickest turn rates in the industry.  Apple says it only has 3-6 weeks of inventory at best, and many times its first come, first sold.    


     


    Samsung sells thru many many many third party distributors and many times it sells old inventory cheap just to get rid of it.  It is reported by several sources that Apple is making 70% of the profit in the smart phone market.   That pretty much says it all. 


     


    Just saying.....

  • Reply 14 of 42
    mdriftmeyermdriftmeyer Posts: 7,242member

    Quote:

    Originally Posted by Eriamjh View Post


    Sold vs. shipped means nothing when it comes to profits.  Profits are profits.  Why is Samsung so profitable and HTC going down the toilet?  I admit, I know nothing of either phones, but is Samsung "innovating" far more than HTC or is HTC just failing to capitalize on the market due to lack of advertizing?  Poor carrier tie-ins?  Not enough sell-thru channels?


     


    Apple's profits are due July 27/28? and should wow us all.  I just hope their stock reflects that (I own some).



     


    Samsung makes a lot more than just handsets.


     


    Read the report: http://www.samsung.com/us/aboutsamsung/ir/financialinformation/earningsrelease/IR_Earnings2007.html


     


    Presentation: http://www.samsung.com/us/aboutsamsung/ir/ireventpresentations/earningsrelease/downloads/2012/20120429_conference_eng.pdf


     


    The SmartTV sales were up 550% and I don't expect that to continue when Apple enters the market.




    Their Semiconductor and Memory sales both declined, 13% and 17% respectively. Operating profits in Semiconductors dropped 54%.


     


    Their profits are in Handsets and SmartTVs.

  • Reply 15 of 42
    andysolandysol Posts: 2,506member

    Quote:

    Originally Posted by mdriftmeyer View Post


     


    Samsung makes a lot more than just handsets.


     


    Read the report: http://www.samsung.com/us/aboutsamsung/ir/financialinformation/earningsrelease/IR_Earnings2007.html


     


    Presentation: http://www.samsung.com/us/aboutsamsung/ir/ireventpresentations/earningsrelease/downloads/2012/20120429_conference_eng.pdf


     


    The SmartTV sales were up 550% and I don't expect that to continue when Apple enters the market.




    Their Semiconductor and Memory sales both declined, 13% and 17% respectively. Operating profits in Semiconductors dropped 54%.


     


    Their profits are in Handsets and SmartTVs.



     


    Good point- didn't know the SmartTV sales jumped up that much.  It definitely see why it looks appealing to people (although I wouldn't buy one).  In addition, they have their hands in everything- cameras, camcorders, security cameras, air conditioners, household appliances, kitchen appliances- and that's just consumer stuff...  They are very diverse and very profitable.  I'm sure they and their shareholders don't care that they release their smartphone numbers- all they care about are their profits- which are huge.

  • Reply 16 of 42
    wovelwovel Posts: 956member
    gatorguy wrote: »
    Apple's revenue is not reported as sales to end-users either. These two AI sentences are constructed so as to be misleading IMO.

    They report devices in the channel at the beginning, devices put into the channel, and devices in the channel at the end. It is not rocket science. They do this separately for iPhones and iPads.

    Samsung reports nothing now and used to only report devices going into the channel. That takes a crystal ball and LSD to figure out.

    How is their statement misleading? Where are the devices going?
  • Reply 17 of 42
    wovelwovel Posts: 956member
    andysol wrote: »
    Good point- didn't know the SmartTV sales jumped up that much.  It definitely see why it looks appealing to people (although I wouldn't buy one).  In addition, they have their hands in everything- cameras, camcorders, security cameras, air conditioners, household appliances, kitchen appliances- and that's just consumer stuff...  They are very diverse and very profitable.  I'm sure they and their shareholders don't care that they release their smartphone numbers- all they care about are their profits- which are huge.

    Of they went into that detail in every unit the call would take all quarter :)
  • Reply 18 of 42
    HTC's problem started when Apple expanded to more carriers.
    Simple as that.

    HTC will be finished the day the iPhone 4 becomes free on contract.
  • Reply 19 of 42
    dasanman69dasanman69 Posts: 12,979member
    lkrupp wrote: »
    I find it very amusing that the Fandroids (really just Apple haters) move from one manufacturer to another depending on the proposed iPhone killer du jour. At one time Motorola was the be all end all of smarthphones, the one that would destroy Apple. Then as Moto started to trail off this crowd hitched their wagons to HTC. Now Samsung is the White Knight that will deal the death blow and save mankind from the walled garden. In the tablet world it was... hell, I don't even remember. Then it was the Fire, then the Galaxy Tab, now the Nexus 7. I wonder what happens when some of these manufacturers decide to go with yet another mobile OS. Rumors are flying that Firefox OS is around the corner. Samsung has its own OS if it wants to go that way. Fine and dandy but it all revolves around defeating Apple and taking that profit crown away.

    I don't think anyone is trying to destroy Apple. Moto was in a good position to be the number 1 Android handset maker and squandered that opportunity with either crappy, ugly, too frequently released devices plus super locked down to ensure devs wouldn't choose them. They should stick to making high end devices like the RAZR MAXX and they might be able to gain the number 1 position.
  • Reply 20 of 42
    gatorguy wrote: »
    Apple's revenue is not reported as sales to end-users either. These two AI sentences are constructed so as to be misleading IMO.

    The real issue isn't end users vs channel. The issue is Samsung doesn't break down sales by type. They simply say "40 million smartphones" sold. This includes the GS3 right down to the 320x240 Android phone still selling with Froyo. It also includes their QWERTY smartphones, their phones running Bada, Windows Mobile and WP7. The fandroids like to point out total Samsung smartphones vs total iPhone sales, but this is meaningless since many Ssmsung phones don't compete with the iPhone.

    The best way to look at this is to look at their revenue/profit and compare this to their phone sales. Then you realize the average price of their phones is quite low, meaning a large portion of those sales are low end devices. Yet me even claiming such blasphemy will get me berated, even though the numbers prove my position.
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