HTC Corp. on Friday announced its revised estimated second quarter earnings, which saw the company at their lowest in more than a decade. Now the Taiwanese manufacturer predicts its biggest ever quarterly loss, largely due to slack demand for its products in China.
In the report, HTC says that it expects to record a net operating loss between $257 million to $291 million for Q2 ending June. While revenues are expected to drop somewhere between $1.06 to $1.66 billion, compared to $1.48 billion estimated earlier.
The company now predicts a 30 percent lower growth rate compared to its previous estimates, adding that poor sales and fierce competition from rivals has brought about this all-time low.
“The change for revenue outlook is due to slower demand for high-end Android devices, and weaker than forecast sales in China, while gross margin is revised primarily on product mix change and lowered scale. At the same time, increased competition has raised operating costs for product promotion; HTC is enacting measures to further improve operating efficiency,” said HTC in the revised report.
Another major factor that apparently led to all this was the slack performance of its flagship One M9. As in the report, HTC clearly says it will incur one-time expense of $93 million for ‘idled assets’, implying that the company overestimated the demand of its flagship, hence there was excess production leading to more supply than demand, and now is trying to recuperate from the loss of these extra units produced.
“In recognition of prevailing market conditions, HTC has embarked on a comprehensive review on our assets based on current business conditions and future operational needs,” said HTC. Now the company says it’ll focus on ways to cut costs and find ways to improve its competitiveness and profitability. It seems the Taiwanese manufacturer would also be eying other avenues and diversify its business beyond just smartphones.
“We will aggressively develop new business opportunities beyond smartphones,” said the company.
Since the release of the report, the price of the company’s shares has hit a 12-year low on the Taiwan Stock Exchange, which led CEO Cher Wang issue an apology to the company’s shareholders.