HTC's revenue cut in half as its smartphones fail to resonate worldwide

Its flagship phone, the One M9, has not caught on, and HTC says it will continue to invest in other areas, including virtual reality, as it looks to turn itself around.

Don Reisinger
CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
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HTC's latest flagship handset, the One M9, isn't helping the company succeed. Andrew Hoyle/CNET

The second quarter of 2015 was not kind to HTC as revenue for the Taiwanese phone maker slid significantly and its profits from last year turned to losses this time around.

The company's revenue reached NT$33 billion ($1.04 billion) worldwide (PDF) during the second quarter, or just half of its NT$65.1 billion revenue during the same period last year. Meanwhile, its operating profit -- a measure of the difference between revenue and expenses before taxes, interest, and other items are factored in -- fell from a gain of NT$2.4 billion a year ago to a loss of NT$5.1 billion.

Difficulties seemed to arise for HTC at every turn during the quarter, which ended June 30. Its flagship smartphone, the One M9, has not resonated with a worldwide population that has been more inclined to pick up alternatives like the Samsung Galaxy S6 or Apple's iPhone 6 line. China also proved to be a challenge for the company as competitors Xiaomi and Huawei continue to attract more customers in that critical market.

HTC acknowledged that demand has been "weaker than expected at the high end" of the smartphone market and that sales in China have been "weak." The company did, however, say that in some emerging markets, shipments were up.

The disappointing quarter comes at a time of flux for HTC. The company is in the middle of a rebuild at all levels as it tries to compete more effectively against the likes of Apple, Samsung and Huawei. Though it was briefly among the market leaders several years ago, HTC has since failed to convince consumers that it has compelling products worthy of stealing attention -- and dollars -- from the iPhone and Samsung's Galaxy line, among others.

Meanwhile, HTC has shaken up its leadership to try to turn things around. In March, long-time CEO Peter Chou was replaced by co-founder and chairwoman Cher Wang. Chou, who is still at HTC, is now focused on developing new products. The company has also been unsettled in a critical role, the position of design chief, with the loss in April 2014 of Scott Croyle and this past March of his replacement, Jonah Becker.

As its smartphone stature has ebbed, HTC has started to branch out with a wider range of gadgets, including the Re camera , the Grip fitness band and the Vive virtual-reality headset. Looking ahead, HTC says that it will continue to invest in diversified areas to not rely so heavily on smartphones. The company also hinted at some possible cost-cutting measures as it looks to "implement company-wide efficiency measures to reduce operating costs across the organizations." In corporate speak, that often means layoffs.

Until HTC can turn things around, investors shouldn't expect much: The company is forecasting a revenue range of between NT$19 billion and NT$22 billion in the third quarter. It also expects to post a loss.

HTC did not immediately respond to a request for additional comment.