HTC Slashes Jobs As Smartphone Sales Flatten
On Aug. 6, HTC announced weaker than expected demand for its high-end Android smartphones. This, coupled with weak sales in China, is forcing the phone maker to streamline its business and implement company-wide efficiency measures to reduce operating costs across the organization.
This will result in the Taiwanese cutting workers to reduce its costs.
HTC posted a second quarter loss of $252 million against revenues of just over $1 billion, with CFO and president of global sales, Chialin Chang, admitting on an analyst call Thursday that consumers were looking for more fashionable handsets than the ones HTC is marketing. Chang did not offer specifics.
"The cuts will be across the board," Chang said, according to a report from Reuters. "They will be significant."
Despite promises of cost cutting and streamlining of its product line, analysts were less than optimistic when it came to the company's performance in the near future.
"We believe HTC will keep losing share in the smartphone market and will keep losing money," Calvin Huang, an analyst with Taiwan's SinoPac Securities, wrote in a research note obtained by Reuters.
(Image: Eric Zeman)
Other recent analyst figures peg the company's worldwide smartphone market share at an anemic 2% or less, down by more than two-thirds from its 2011 peak.
Smartphone models like its flagship One M9 have garnered good reviews and boast a competitive feature set including an all-metal unibody design and a Qualcomm Snapdragon 810 octa-core processor, but have failed to find favor with consumers.
[Read more about the HTC One M9.]
HTC is not alone in its struggle to hold attention in the ultra-competitive smartphone market. A May Gartner report found that while worldwide smartphone sales jumped nearly 20% in the first quarter of the year. However, even powerhouse performer Samsung also took a significant dip.
Despite the company's claims to streamline its product line, just last month HTC announced a line of Desire smartphones comprising four different models, with an emphasis on affordability and color options.
HTC noted in its earnings report that the company it will continue to invest in new product areas such as virtual reality, where it is working with a wide group of developers on content creation across a spectrum of applications including gaming, entertainment, and education.
The beleaguered mobile phone manufacturer has been struggling in the face of stiff competition for some time now. In May, HTC was forced to issue a strong statement rejecting an overture from an Asus executive, who suggested the PC maker was interested in buying the company.
HTC quickly fired back with a note on its investor's page clarifying the company's stance in response to Asus's unofficial acquisition offer.
The company's troubles extend beyond its smartphones, as the company announced in July that it would delay the launch of its Grip fitness band, which sports a touch display, is waterproof, works with Android and iOS and has GPS, until later this year. The device had previously been scheduled to reach store shelves in the spring.