HTC vows to cut costs to revive profits

Expecting a sluggish fourth quarter, the company plans to chop expenses 25 percent.

The HTC One.
The HTC One. Sarah Tew/CNET

HTC is aiming to return to profitability by slashing its operating costs.

In a briefing held Tuesday, the Taiwanese company said it expects fourth-quarter revenue in the range of NT$40 billion ($1.4 billion) to NT$45 billion ($1.5 billion), according to Bloomberg. Analysts queried by Bloomberg had forecast an average of NT$52.2 billion ($1.77 billion).

HTC executives said that the company plans to limit this quarter's operating expenses to around $340 million, 24 percent lower than what was spent last quarter. However, HTC didn't explain how or where it would cut costs.

Two of the company's flagship products -- the HTC One and the HTC One Max -- have faced problems. Supply issues adversely affected the HTC One earlier in the year, while the One Max has failed to drum up much consumer demand.

"Their profit driver for the quarter is HTC One Max, which is not a very competitive product," Yuanta Financial Holding analyst Dennis Chan told Bloomberg. "HTC One was a good phone but faced supply chain problems. Now HTC One Max has no supply troubles, yet it's not a strong product."

HTC also plans to release less-expensive smartphones in a bid to grab a wider audience.

"We're looking at broader products in this quarter," said HTC Chief Financial Officer Chia-Lin Chang, according to Bloomberg. "We aim for higher volume into 2014 that will give better profitability."

Also in the third quarter, HTC suffered its first-ever quarterly loss, reporting a decrease of $102 million.

CEO Peter Chou tried to paint a brighter picture in Tuesday's earnings report.

"We have delivered good progress in the third quarter with the introduction of HTC One Mini and One Max; we now have an HTC One for everyone," Chou said. "We have also launched the 'Here's To Change' global brand campaign, affirming our role as the change-maker challenging the status quo since the dawn of the mobile phone industry, as well as our mission of continuing to bring change into the hands of people around the world."

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.

 

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