HTC unveils plans to release new mid-tier handsets as it projects up to 29.3% drop in Q3 revenue

HTC unveils plans to release new mid-tier handsets as it projects up to 29.3% drop in Q3 revenue

Taiwanese phone-maker HTC has unveiled plans to release a series of new mid-tier handsets at the end of this quarter or early next quarter, as it seeks to regain momentum and claw back some market share in the smartphone sector.

CEO Peter Chou said in the company’s Q2 earnings call that HTC is expecting Q3 revenue in the range of NT$50 billion ($1.7 billion) – NT$60 billion ($2 billion), down from Q2’s revenue of NT$70.7 billion ($2.35 billion) by as much as 29.3 percent.

Chou noted that the company’s upcoming plans will “address some of our challenges of mid-tier product competitiveness.” He acknowledged that the company has suffered due to intense competition in the market, but tried to assure investors that the new range of products — almost certainly referring to handsets — will help to address these challenges.

In particular, the company noted that in China competition at the mid-tier sector of the smartphone market intensified, despite improved sales of its high-end models, which could have added a sense of urgency to HTC’s push in diversifying its product range.

Chou said that the high cost structure of manufacturing HTC One has not been improving as much as expected due to the lack of economic scale, which will impact the company’s growth margin. He assured investors that HTC is taking actions to improve and expect to see these improvements take effect in the fourth quarter (though investors during the call sounded pretty much put off by the company’s disappointing showing so far this year).

“We are hoping that Q3 is our bottom and we will see improvement in Q4… we are very committed to innovate and stay competitive in the market,” Chou said.

He also noted that besides product-related tactics, HTC is also working on potential partnerships, and he hopes this would help the company strengthen its competence in the market next year.

HTC has been struggling amid intense competition in the smartphone market, posting record low Q1 2013 financials of a mere $2.88 million (NT$85 million) in profit and $1.45 billion (NT$42.8 billion) in total sales. Even for its Q2 2013 financials, despite chalking up an improved quarter-on-quarter profit figure of NT$1.25 billion ($41.63 million), it was down a whopping 83 percent on Q2 2012.

The company’s shares plunged to their lowest level since November 2005 in early July following the Q2 results, erasing $395 million from its market value.

Two weeks ago, HTC revealed a follow up to the successful HTC One Android-based smartphone that went on sale earlier in the year called the HTC One Mini, which would come in “about two price-points below” the HTC One in terms of operators’ ranges — marking one of its major steps in taking on the mid-tier market.

Throughout the earnings call, there was plenty of talk from Chou about HTC building up its brand awareness and that he believes over time, the brand will become the most important part of a consumer’s purchase decision. Whether or not this will come to fruition though, and fast enough for HTC’s investors to be convinced, is another matter.

See related: Cheaper iPhone rumored, BlackBerry’s market share crumbles — the smartphone smart money is in the mid-range

Image Credit: Mandy Cheng via AFP/Getty Images

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