HTC may post first operating loss in Q3, company warns

‘Higher cost structure, lack of economy of scale’ could lead to first loss in HTC's history

HTC has today released finalized second-quarter financial results, and with it a warning that it may slip into an operating loss during the third quarter. Q2 revenue was reported at NT$70.7 billion ($2.37 billion), with gross margin of 23.2% and operating margin of 1.5%. Net profit was NT$1.25 billion ($40 million), while EPS was NT$1.50 ($0.05). The numbers show little change from HTC’s unaudited figures, released earlier in the month. The company met its own revenue targets, but profits fell by 83 percent year-on-year, and the monthly breakdown showed that revenues fell almost 24 percent from May to June.

Worse still, the company’s Q3 outlook predicts an operating margin of between 0 and -8 percent, suggesting HTC could make first ever loss in the next quarter. HTC blames “relatively higher cost structure, lack of economy of scale and certain provisions needed to facilitate the clearance of aging products in the channel” for its reduced margins. However it pointed out that the HTC One has so far performed strongly, “better than that of our hero products for the same period last year,” adding that its new flagship has helped improve its brand awareness.

HTC also says it plans to release more competitive products in the mid-range space — a likely reference to new devices including the recently-launched HTC One Mini — saying it hopes “to regain momentum and market share in these segments in Q4.”

And that sentiment is echoed in reference to the company’s financial performance. “Actions have been taken,” today’s news release states, “and we expect to see improvement in Q4.”

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AT&T HTC One mini press photo appears, release imminent

This isn’t the first time we’ve seen or heard talk about HTC’s new One mini smartphone for AT&T, but this is however the first official press render confirming the carrier. Instead of the usual blurrycam photos from the depths of the internet, we now have an official photo showing off the handset.

The folks from HTC announced the new One mini earlier this month, but so far we’ve yet to hear any official reports from US carriers stating they’ll get the miniature 4.3-inch smartphone. Is it wrong we’re calling a 4.3-inch device miniature? I think so. That aside, take a peek at the new image below.

When HTC announced the device back on the 18th we got plenty of hands-on timewith it, as well as comparison shots next to the original. Multiple leaks have confirmed AT&T will offer the mini, but this leaked press render basically confirms it one more time. Now all we need is the word from AT&T or HTC themselves, and a release date.

As we all know, this device has a 4.3-inch 720p HD display, Android 4.2.2 Jelly Bean, HTC Sense UI 5.0 and Blinkfeed, that Ultrapixel camera, and it’s all powered by a 1.4 GHz dual-core with 1GB of RAM. It’s quite the little phone, and we’ll update the minute we know more about the plans of AT&T, and hopefully other US carriers. Still no word on Verizon, about any HTC One device.

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HTC “needs to do more”, establishes new “Emerging Devices” unit

Even with a successful One and a promising family of derived products in the pipeline, HTC isn’t out of the woods, as the latest financial results have indicated. The company recorded a massive 83 percent drop in profits year-over-year in the last quarter, and pundits believe that next quarter will be even more punishing for the one time darling of the smartphone industry.

To survive its hardest year yet, HTC needs exceptional measures, and CEO Peter Chou knows it. The need for a company-wide shakeup may explain the abrupt departure of several prominent executives since the beginning of the year, including luminaries like Chief Product Officer Kouji Koudera.

Now Chou turned his sights to a crucial market for HTC – North America. The company’s President of Global Sales, Jason Mackenzie will become the new head of HTC North America, according to an email obtained by the Wall Street Journal. Mackenzie is familiar with the position – he served as a president of the unit before taking over global sales.

Jason Mackenzie will be taking the seat of the current president of the North American unit, Mike Woodward, who will be moving on to run a newly established “Emerging Devices” unit, focused on “innovative new HTC products and global distribution strategies”. Whatever emerging devices means for HTC is just speculation, but wearable devices and tablets are two areas where the Taiwanese company could consider making a move, before it’s too late.

It’s important to observe Peter Chou’s muted acknowledgement that the One hasn’t been, by any measure, enough for HTC to become again the force it once was in the smartphone industry:

But as you know and would expect, we also need to do more. With the success of the One, we have many new opportunities both to expand current sales as well as to enter new distribution channels with new business models.
Peter Chou, HTC

HTC just launched the One Mini, a slightly more compact One lookalike, and is rumored to prepare theOne Max, its first supersized phone, for early fall. It remains to be seen what emerging devices will the new division come up with, but one thing is for sure – HTC needs to fundamentally change something, if it wants to exist as an independent company a year from now. Already, some voices ask for HTC to sell itself, with rivals from China, like Huawei, looking like the ideal suitors.

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Here’s a first look at the HTC One Mini (video)

Earlier today, HTC announced a more compact version of its flagship device for the year, the HTC One, dubbing it the HTC One Mini. And now, HTC has released a video taking a first look at the miniature device, though it doesn’t really show us anything beyond what we expected this new device to have.

Here’s a quick reminder of the specs:

• Size: 132 x 63.2 x 9.25mm
• Weight: 122g
• 4.3-inch S-LCD3 display with 1280 x 720 resolution (341 ppi)
• 1.4GHz dual-core Qualcomm Snapdragon 400 processor, Adreno 305 GPU
• 1GB of DDR3
• 16GB of storage but no microSD card
• 4-megapixel UltraPixel camera with HTC Zoe support
• 1.6-megapixel front-facing camera
• LTE support
• Bluetooth 4.0
• BoomSound support
• Android 4.2.2 with Sense 5 on top and BlinkFeed
• 1800 mAh non-removable battery

In some respects, it’s pretty similar to the Galaxy S4 Mini, especially when it comes to the processing package, and as you might expect, the HTC One Mini doesn’t look much different from its big brother, the One. So, is there anything new we can expect in the one? Aside from downgraded specs, there isn’t much. In fact, HTC’s first look video basically tells us what we already expected.

To sum it up, it basically shows us that BlinkFeed, HTC Zoe, and HTC BoomSound makes a return. The reassurance is nice to see considering that a lot of features in the Galaxy S4 didn’t make it to the Galaxy S4 Mini. Despite telling us what we already expected, HTC created a pretty darn awesome commercial showcasing it all. Check out the video for yourself below!

So, HTC basically just dropped a bomb on the mid-range market. What do you think of the HTC One Mini?

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