HTC: LTE Handsets Disappoint
The Taiwanese handset maker is forecasting a first-quarter profit dip as it struggles to stand out amongst its Android competition and admits it "dropped the ball" on Long Term Evolution (LTE) smartphones in the fourth quarter.
"Our weakness in first-quarter guidance also comes from facing competition in the U.S. from iPhone and Samsung," said CFO Winston Yung on HTC's earnings call. "LTE handsets also didn’t meet our expectations."
The company didn't break out expected shipments for the quarter for the first time, but said it's in a transitional period, likely as it awaits new product launches at Mobile World Congress this month. The CFO also said HTC had to make compromises in battery life and form factor of LTE phones, which hurt sales in the U.S. It plans to addresses these issues in future 4G phones. (See HTC Unwraps Its First LTE Windows Phone and HTC Shuns Cheap Phones.)
Overall for the fourth quarter, HTC reported a net profit of NT$10.94 billion (US $369 million), a 26 percent drop over the previous quarter. It is expecting revenue between NT $65 billion (US $2.2 billion) to NT $70 billion ($2.36 billion) in the first quarter, below analyst expectations of $2.86 billion.
That HTC is in a transitional period may be understandable as it builds its next batch of flagship phones, such as the quad-core HTC Ville, but it needs to step up its game in LTE. It's hard enough to stand out against the more well-known Android maker Samsung Corp. and promote the Nokia Corp. (NYSE: NOK)-championed Windows Phone on a software level, so LTE has to be one feature it nails.
Working out the kinks in its hardware design, as well as finding a way to differentiate its OS, will be crucial for HTC to compete. But it needs to do so in a way that shows off the power of LTE and convinces consumers 4G is a good enough reason to ditch the 3G iPhone.
— Sarah Reedy, Senior Reporter, Light Reading Mobile