Taiwanese smartphone maker HTC has warned that it expects to slide to its first-ever loss during the third quarter, as its second-quarter profits slumped 83% year on year.
HTC announced profits of just
Amid signs that the top-end smartphone business is becoming saturated, and with its HTC One flagship phone being pressured by its larger rivals Samsung and Apple, the company warned that revenue could drop to between
The company hinted that some of the losses will be from excess inventory from the HTC First, which used
"They are definitely in trouble," said
He warned that the company was low on cash, and that without profits it could face serious challenges to its survival in the future. HTC's balance sheet shows that it had cash and short-term equivalents worth
That could make it a takeover target for larger Chinese rivals if it is unable to reverse that trend. In the mobile handset business, only LG and
The company has recently seen a shakeup of its management in the US and far east, pointing to internal tensions as it struggles with the challenge.
HTC dropped out of the world's top five smartphone makers during 2012, and IDC's forthcoming figures show that it shipped an estimated 5.1m smartphones in the second quarter, down from 9.1m a year ago, even as the smartphone market overall has grown by 45%.
In a statement, HTC insisted that "the new HTC One has performed well in the market, better than that of our hero products for the same period last year … With the help of [the] HTC One, we have regained superphone market share across major markets including
It blamed its impending loss on "relatively higher cost structure, lack of economy of scale, and certain provisions to facilitate the clearing of ancient products in the channel", and that it expects improvements in the fourth quarter.
Once the bigger maker of Android handsets in the world, and in 2010 the largest such supplier to the US market, HTC has been squeezed out of the Android market by Samsung, which has used the combination of its huge economies of scale and marketing budget to dominate the market, taking the crown as the world's leader maker of both mobile handsets and smartphones from
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