Taiwan’s HTC reports first loss
October 31, 2013 Category Uncategorized
Taiwan’s HTC slid into the red for the first time in the third quarter, with sales hit hard by fierce competition in the smartphone market, supply-chain constraints and internal turmoil. It posted an operating loss of NTD3.5 billion as sales for the quarter tumbled by a third from a year earlier. Microsoft was talking to HTC about adding its Windows operating system to the Taiwanese firm’s Android-based smartphones at little or no cost. HTC is the first company to make both Windows and Android phones. HTC says the next two months will be its “biggest challenge” as it tries to win sales from Apple and Samsung. HTC’s share of the global smartphone market shrank to 2.8% in the second quarter from 5.8% a year earlier. “We don’t see a turnaround in the near future,” said Richard Ko, Analyst at KGI Securities. “Its products aren’t good enough to compete, and those in the pipeline aren’t going to rescue the business either.” HTC is pinning its hopes on new products, including models that build on the HTC One franchise, to halt declining sales. The company’s HTC One mini, which went on sale in August, features a 4.3-inch display and a more slender design. The slump in its share price could make HTC a takeover target for rivals including Lenovo and Huawei Technologies. Sources said HTC had combined production from two lines at Taoyuan in Taiwan into one, which would reduce its potential capacity by about one million phones per month, out of a total capacity of around 2.5 million at the site and around 4.5 million including operations elsewhere. Most of the assembly lines in HTC’s Shanghai factory, which can produce two million phones a month, were also out of production, one of the sources said, with only a small number of phones being produced for sale inside China. HTC was considering selling the out-of-use production lines in China and Taiwan, two of the sources said. HTC Chief Executive Peter Chou, the driving force behind its award-winning handsets, has temporarily handed some of his duties to the company’s Chairwoman in order to focus on innovation and product development, the Financial Times reported. HTC, which positions itself as a premium brand, will contract out some manufacturing to FIH Mobile, a subsidiary of Taiwan’s Hon Hai Precision Industry, because contract manufacturers have better component supply management and cost control. It is also in talks with Compal Communications and Wistron, according to four sources.
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