The Washington Post

HTC posts big loss but stops its sales slide

(Kiyoshi Ota/Bloomberg)

Smartphone maker HTC just can't catch a break. The Taiwanese firm released its unaudited first quarter financial results Monday showing a deeper-than-expected loss of $62 million.

That puts even greater pressure on the firm's latest smartphone, the HTC One M8, which went on sale earlier this month and is the company's best hope to gain ground against Samsung, now the world's leading smartphone maker, and fight it's way back onto the list of the globe's top smartphone makers.

It's the second time in three quarters that HTC has reported a quarterly loss. The firm, which was once synonymous with Google's Android operating system, has steadily lost ground against competitors, falling out of the list of the world's top five smartphone makers at the end of 2013.

HTC -- like firms such as Sony and LG -- has floundered as the demand for high-end smartphones (which produce big profits) has shrunk to a two-horse race between Apple and Samsung. Meanwhile, the greatest growth in the smartphone market across the globe has been for cheap, low-priced phones -- an area where these middle-child firms have been effectively unable to compete with Chinese firms, including Huawei, Lenovo and ZTE.

HTC has tried to shift its business strategies a couple of times to deal with the rapidly evolving smartphone market, but it simply doesn't have the money, supply chain or marketing budget to take on its biggest rivals. A decision two years ago to focus on premium phones produced fantastic devices. But the firm didn't have the money to compete with the advertising war chests of Samsung or Apple to let consumers know about their products.

To revive its fortunes, the company announced last month that it would focus on mid-tier and low-end phones in the $150-$200 price range. It's a smart but tricky tactic for the company, which has to walk a fine line between making cheap devices and not undercutting its reputation for producing quality products.

In fact, the only bright spot in the company's financial results for the first quarter was that sales didn't fall for the first time in 28 months, even before the release of the HTC One M8. It's a trend that HTC projects will continue into the next quarter and drive the firm back to profitability, saying that it expects its most popular mid-tier phone, the Desire 816, will continue to boost sales. HTC will release its full first quarter performance and outlook for the next quarter in May.

HTC shares, which trade on the Taiwanese stock exchange, were trading up despite the major loss, at a price of NT $159.50, or about $5.27.

Hayley Tsukayama covers consumer technology for The Washington Post.



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