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HTC Kicks Off Marketing Campaign Following Q1 Sales Slide

Taoyuan, Taiwan – Smartphone
maker HTC kicked off a global marketing campaign following the launch of its
new hero smartphones to kick start its steeply sliding sales and profits, the
company announced in releasing audited first-quarter financial results.

The company previously released
unaudited results that closely tracked the audited results, which show a 35.6
percent decline in first-quarter revenues and a 70 percent decline in net
income after taxes.

The declines were caused
primarily by a product transition in which new HTC One-series phones began to
ship only at the end of the quarter, the company said.

Although it promises renewed
growth because of the marketing campaign and the first-quarter product launch, HTC
forecasts a second-quarter revenue drop of 16 percent to NT$105 billion ($2.56
billion), from NT$124.4 billion in the second quarter of 2011.

Referring to the steep
first-quarter revenue decline, a company statement attributed the drop “primarily”
to a “product transition cycle, with new product line sales beginning to ramp at
the end of the first quarter.” Gross margin “was impacted by the margins of
older products, and lowered scale contributed to a lower operating margin
during the quarter,” the company added.

CEO Peter Chou called the two
most recent quarters “a rebuilding period for HTC.” Citing “very positive”
market response to the new One series, he said, “we believe it will take HTC
into its next phase of growth.”

HTC kicked off a new global marketing
campaign in April to support its new hero One series and take “a more holistic
and efficient approach to global marketing to expand its brand equity and
preference,” the company also said. “Through this unified global campaign, the
company will deliver a unified global message across its key channels, and from
this HTC expects to see an increase in both brand value and sales momentum.”

HTC’s first-quarter revenues fell
35.6 percent to NT$65 billion ($2.2 billion), in line with the company’s
forecast decline of 32.8 percent to 37.6 percent.

The cellular handset and tablet
maker also posted a 72 percent decline in operating income to NT$4.3 billion ($146
million) and a 70 percent decline in net income after taxes to NT$4.47 billion
($151.4 million).

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