HTC working on cheaper phones, cutting company costs

HTC is cutting its operating costs by almost a quarter in order to stave off bad results, but its new One max smartphone isn't capturing buyers' interest.

HTC is cutting its operating costs by almost a quarter in order to stave off bad results, but its new One max smartphone isn't capturing buyers' interest.

The HTC One. (Credit: Sarah Tew/CNET)

HTC has had a tough year: first, facing supply problems for the HTC One and then lacklustre demand for the HTC One mini and HTC One max . According to Bloomberg, the company's most recent forward-looking earnings statement suggests revenues of up to NT$45 billion (AU$1.6 billion) for its fourth quarter, NT$7 billion (AU$250 million) short of Bloomberg analysts' NT$52 billion (AU$1.8 billion) projection.

To make up for this shortfall, HTC will limit its operating expenses, although it's not clear where savings will be made. It will also introduce new, cheaper smartphones to appeal to a broader audience, but it won't make an attempt at what CFO Chang Chailin called the "ultra low-end" market.

As well as entering the mid- to low-end phone race, HTC is considering outsourcing production of its devices if it is financially advantageous to do so. HTC owns factories in both Taiwan and China, and in late October, the company denied a Reuters report that suggested it would sell these production lines, some of which have allegedly been sitting unused since August.

HTC's profits will also be boosted by the finalised sale of its stake in Beats Electronics, the company behind the popular Beats portable audio devices. HTC originally had a 50.1 per cent share of Beats it bought for US$300 million in 2001, but the headphone and speaker company bought half of that back last year for US$150 million and recently completed the purchase of the second half for US$165 million.

With this recent hardship for HTC, it's unlikely we'll see a direct successor to the flagship One any time soon. It also means Iron Man might be stuck promoting a handful of entry-level handsets.

 

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