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HTC clings to profit as sales continue to drop

Due in large part to cost cuts, the company beats analyst estimates in its third quarter with a net profit of $21 million.

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The HTC One M8 has failed to lure in customers, as Apple and Samsung continue to dominate the smartphone market. Andrew Hoyle/CNET

Taiwanese smartphone maker HTC had a better-than-expected third quarter, but it had more to do with effective cost cutting than actual sales.

HTC posted a net profit of NT$640 million ($21 million), or NT 78 cents per share, and revenue of NT$41.9 billion ($1.4 billion) for the three months ended September 30, the company announced on Friday. While sales were down year over year -- the company generated NT$47 billion during the same period in 2013 -- it was able to turn last year's NT$3 billion loss into a profit.

Analysts expected to see a profit of just NT$216.23 million, according to Reuters. This is HTC's second consecutive quarter of profits, even as sales continued a more than three-year decline. At its last quarterly briefing, HTC said significant cost-cutting activities and efficiencies in marketing would help it maintain its bottom line, according to Reuters.

HTC finds itself in an increasingly tenuous position in the mobile space. Its flagship phone, the HTC One M8 , has failed to lure in customers as companies like Apple and Samsung solidify their positions at the top of the mobile market. In July, HTC tried to address problems in its smartphone business by reshuffling its executive team. Now, Chief Financial Officer Chang Chialin and Chief Engineering Officer David Chen run HTC's smartphone operation.

In addition to that move, HTC announced plans to start building devices in new market areas. The company is still working on a smartwatch that's due to be released in 2015, CNET News learned earlier this month, and it's reportedly working with Google to build the Nexus 9 tablet.

HTC provided no insight into its expectations to forthcoming quarters. The company did not immediately responded to a request for comment on its earnings.