HTC posts first-ever quarterly losses as troubles multiply

Taiwan's HTC Corp slid into the red for the first time in the third quarter, with sales hit hard by fierce competition in the smartphone market, supply chain constraints and internal turmoil.

Underscoring a dramatic decline for a company which boasts award-winning smartphones but has failed to develop a durable brand of handsets, it posted an operating loss of T$3.5 billion as sales for the quarter tumbled by a third from the same period a year earlier.

The losses were wider than expected and most analysts said that the immediate future looked bleak.

"Fundamentally there are a lot of things that need to be fixed," said Laura Chen at BNP Paribas, adding that the company needed to work on marketing, supply chain management and streaming its product line. "No sign of recovery anytime soon."

At a net level, HTC booked a loss of T$2.97 billion, bigger than an expected loss of T$1.8 billion, according to Thomson Reuters SmartEstimates. That compares with a net profit of T$3.9 billion in the same quarter last year.

But after sliding in early trade, HTC shares rebounded to trade up 2 percent on the day, boosted in part by a note from Fubon Securities citing the possibility of the company teaming up with a unnamed Chinese IT manufacturer either through a potential cooperation deal or merger.

HTC declined to comment on the Fubon report on Friday.

Last month, HTC Chairwoman Cher Wang, responding to growing speculation about a possible merger, said she would not sell the company, adding that she had no plan to replace current CEO Peter Chou and that a low share price does not bother her.

Like other struggling smartphone makers Nokia Oyj and Blackberry Ltd, HTC lacks the scale of bigger rivals Apple Inc and Samsung Electronics Co Ltd and this year its troubles have only multiplied, sending its shares down 55 percent.

In addition to internal feuding and executive exits, sources have said that it is facing casing shortages for its HTC One Mini. It has also lost some patent cases and media have reported that three of its design executives have been arrested on suspicion of leaking trade secrets.

HTC's share of the global smartphone market has plummeted from a peak of 10.3 percent in the third quarter of 2011 to 2.6 percent in the most recent quarter, according to research firm Gartner.

© Thomson Reuters 2013