HTC Profit Tumble 90%, As Samsung Steals Android Crown

Former Android darling’s profit tumbles 91%

HTC Q4 2012 revenue fell 41% to NT60 bn (A$1.9bn), while net profit was just NT1bn – a whopping 91% fall from a year earlier.

Operating margin was a mere 1% – a massive 11.7% drop from Q4 2011 – and a far cry from the 17.4% margin enjoyed by rival Samsung.

Compared to Q2, operating margin fell 6%, meaning HTC is struggling to make money as the “duopoly” of Samsung and Apple continue to eat up rivals. 

Operating profits also tumbled 95% to NT0.6 bn, HTC said this week.

These earnings are a massive shocker of a result for the No.2 Android maker in OZ, the first and once the biggest maker of Google Android smartphones, before Samsung came along.

HTC is now placing bets on the success of Windows Phone 8 and released several hero devices last quarter.

Although it made it into IDC’s top 5 smartphone makers ranking(No. 4), growth slumped 25% year-on-year, and now accounts for under 5% of the market – half of the share it enjoyed a year prior.

By comparison, Samsung grew 129% and Apple by 46%, according to IDC figures.

CEO, Peter Chou remained positive and said the struggling maker will “continue to focus on the most important element of our business: innovation.”

“Our teams are delivering beautifully designed phones, containing the newest technological advancements. Outstanding products, paired with improvements in our marketing execution and overall readiness give us reason to feel optimistic about the progress we will make in 2013.”

The Taiwanse smartphone maker said high-end devices drove sales during the fourth quarter, noting “strengthened brand preference” for the newly released HTC Butterfly in Japan/ Taiwan, and said “collaboration with operators to continue the momentum.”

US and China were inline with expectations, and HTC said it would broaden its channel footprint with an expanded product portfolio.

EMEA markets showed “sequential improvement” and the company plans to strengthen its local footprint in South Asia by releasing a slew of affordable mobile devices.

Other events during the quarter included a ten licensing deal with Apple after a nasty and prolonged patent fight which HTC, with its limited resources, looked likely to lose.

But worryingly, HTC predicts the future earnings could be worse. Q1 2013 operating margin is estimated to be 0.5-1% and revenue NT$50-60bn.