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HTC Q1 profit plunges 98 percent, despite HTC One launch

The HTC One launches too late to save the handset maker's quarter, with the Taiwanese company making just $2.8 million profit in the first three months of the year.

Nick Hide Managing copy editor
Nick manages CNET's advice copy desk from Springfield, Virginia. He's worked at CNET since 2005.
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The HTC One launched too late to save the Taiwanese company's first-quarter results.

Net profit for the handset maker tumbled to NT$85 million ($2.85 million) from NT$4.5 billion ($152 million) a year ago, a drop of 98 percent.

It's the company's lowest quarterly profit since 2004. Revenue plunged too, to NT$42.8 billion from NT$67.8 billion, the company confirmed in Thursday's earnings call.

The company did not reveal how many units of the HTC One it has so far sold, but said it expected revenues to jump in the second quarter to NT$70 billion.

"Last year we thought we needed to inject some new excitement in HTC's products, and there was an opportunity for us... because everybody looks the same," HTC CEO Peter Chou said on the call this morning. "I think that we have successfully launched the HTC One. We believe people are really getting our concept.

"Our goal is really to develop the HTC brand as a trustable, premier and excellent smartphone brand. That kind of brand awareness and preference is so important to us, as different suppliers are coming from everywhere and there's no differentiation," Chou said, referring to the plethora of Android phones available.

CLSA Asia-Pacific Markets analyst CK Cheng estimates that HTC sold 750,000 HTC Ones in April, Barrons reports, and will ship 3.5 million in the second quarter in total. It will sell as many as 10 million before the end of 2013, Cheng believes. That compares to a predicted 60 million units of the Samsung Galaxy S4.

In January Chou said he believed the "worst for HTC has probably passed," a sentiment borne out by the company's stock rising steadily since the announcement of the HTC One.

Analysts including HSBC and Daiwa last week upgraded their ratings of the Taiwanese company, citing the One's strong reviews.

The phone received a CNET.com Editors' Choice award, with Brian Bennett praising its "stunning metal design, powerful quad-core processor, and beautiful 4.7-inch 1080p screen."

Nevertheless, it faced supply shortages that put a crimp into plans to launch the phone

in March, with HTC blaming a lack of available components for the handset's "Ultrapixel" camera. That caused a shortfall for the company's revenue compared to guidance it provided the market in January.

"I think our supply has greatly improved and in May we'll be supplying a lot more," Chou said. "We're also seeing pretty good demand, we just need to work hard to meet demand."

"HTC is still profit-making, but these results don't bode well for the Taiwanese manufacturer," said Ernest Doku, mobile analyst at Uswitch.com. "The One's delayed journey to market was the most recent of its woes, while an array of handsets lacking in real market differentiation has seen the manufacturer struggle as Samsung's Galaxy range has flourished.

"Aligning with Facebook for the HTC First is a great step in terms of garnering media attention and drawing focus to its forthcoming mid-range effort, but it will need more than a strong handset and shrewd PR moves to reverse recent fortunes."

The company also declined to share any sales figures for the HTC First.

Unboxing a hot, new smartphone, the HTC One
Watch this: Unboxing a hot, new smartphone, the HTC One