HTC Corp., once the second biggest smartphone seller in the US trailing only Apple Inc., announced that it projects losses wider than initially expected and predicts its sales will miss analysts estimates.
HTC Corp. made a statement today, saying that its loss per share in the first quarter is expected to be 2.1 to 2.6 New Taiwan dollars. This would exceed the average analysts estimates of 0.88 New Taiwan dollars per share. On the other hand, the company forecasts sales amounted to 34 to 36 billion New Taiwan dollars, which is less than the initially expected 39.3 billion New Taiwan dollars.
The company also announced its forecast for gross profit margin, which measures the percentage of sales left after deducting production and materials costs, is expected to be between 21.5% and 22% this quarter. The figure was 17.8% in the fourth quarter of 2013, while analysts estimates amounted to 19.5% for the same period of time. HTC Corp.s sales for the first quarter of 2014 are also expected to be the lowest quarterly ones since 2009.
As reported by Bloomberg, the company had two consecutive quarters of operating loss in the second half of last year. This happens for the first time on HTCs record and is the reason for dragging down full-year earnings to a net loss. After selling its remaining stake in Beats Electronics LLC, which increased the companys non-operating income, HTC Corp. posted a net income in the fourth quarter of 2013.
Last year the company signed a contract with Robert Downey Jr. to promote its brand, and this year it is planning to upgrade its marketing in order to stop sales from declining, which incited HTCs first annual net loss on record. As reported by Bloomberg, a person familiar with the plans said that the latest version of the companys slim metallic HTC One is projected to be released in March 2014. The device is expected to be with a larger screen and improved camera.
Now the company is looking forward to bringing a new life to its sales, which are recorded to fall for two consecutive years. Chang Chialin, who is the Chief Financial Officer and also head of global sales of HTC, said in an interview cited by Bloomberg: “We took our eyes somewhat off the ball.” Mr. Chialin refused to say if the company will increase its marketing budget for 2014.
In the same interview, the Chairman of the company – Cher Wang – commented: “It’s really not only the budget increase, it’s the way how you spend the money. Is it smart? There’s a lot of ways to reach the audience right now.”
HTC Corp.s shares fell by 3.79% down in Taiwan on Monday and settled at 127.00 TWD. One-year return rate is down 52.69%.
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