HTC’s Smartphone Slump Deepens, Sales Forecast Slashed By 30 Percent

HTC’s needed a big hit to reinvigorate its efforts in the smartphone world. Once a dominant player in the early days of Google’s Android operating system, HTC has seen its smartphone fortunes crumble amidst rival Android maker Samsung and profit king Apple. When you throw in Chinese powerhouses like Huawei and Xiaomi, HTC’s outlook in the smartphone market has become even cloudier.

HTC was supposed to turn things around with the One M9 flagship smartphone (read the HotHardware review here), the follow-up to last year One M8. However, consumers have been slow to warm up to HTC’s newest flagship. That less than enthusiastic welcome for the One M9 is being felt by HTC, with the company revising its second quarter earnings guidance to reflect lower than expected smartphone sales.

HTC had originally forecast second quarter revenue guidance of NT$46 billion to NT$51 billion ($1.48 billion to $1.64 billion), but has now slashed those figures by an astonishing 30 percent to range between NT$33 billion and NT$36 billion ($1.07 billion to $1.17 billion). HTC was also originally expecting earnings per share (EPS) to come in slightly in the green at NT$0.06 to NT$0.34. However, the company is now forecasting a loss of NT$9.70 and NT$9.94 per share.

HTC One M9
HTC One M9

If that wasn’t bad enough, the company’s gross profit margin is also expected to tumble from the originally forecasted 23 to 23.5 percent to a more sedate 19 to 19.5 percent.

There’s no question that HTC is feeling the heat globally from Samsung, which tends to take all of the oxygen out of the [Android] room with its smartphone releases. The Galaxy S6 and Galaxy S6 Edge both launched to relatively positive reviews and sales for both flagships has been strong since launch. In HTC’s own words, its revised forecast was “due to slower demand for high-end Android devices, and weaker than forecast sales in China.” HTC also acknowledges that stiffer competition has forced the company to spend more on marketing its products; but HTC still doesn’t have the deep pockets to go toe-to-toe with Samsung or Apple on this front.

HTC chairwoman an CEO Cher Wang even went so far as to indicate that the company would “aggressively develop new business opportunities beyond smartphones.” While that sounds promising, if those “opportunities” are anything like the RE camera, we hope that the company goes back to the drawing board.