HTC Posts Lower February Sales

[Nurhisham Hussein]

<div class='os_post_top_link'><a href='http://www.htc.com/press_room/03-press-070306.htm' target='_blank'>http://www.htc.com/press_room/03-press-070306.htm</a><br /><br /></div><i>"High Tech Computer Corp. today announced its total revenues for February 2007 were NT$ 6,599 million, a decrease of 15.58% YoY, while total revenues from January to February 2007 were NT$ 15,005 million, a decrease of 3.36% YoY. The reasons for February 2007 lower revenues were lower sales momentum in the US region, low market visibility and decreased work hours in February (Chinese New Year)."</i><br /><br />This doesn't sound very good. While they tried to put a positive spin on it - 1Q07 revenue is expected to match last year's - these numbers to me are a bit of a warning signal. Early last year, HTC was still very much an ODM where sales depended on somebody else's marketing success (or lack thereof). This year they're far more on their own, and the lack of revenue growth is troublesome (hey, CNY was celebrated last year too). Why? If they were really putting in an effort building their own distribution and retail networks, I would've expected revenue <i>growth</i> but with <i>decreasing</i> profits. Maybe I'm reading too much into a couple of months figures, but the transformation of HTC from device-maker to consumer-brand may turn out to be a much harder slog than anybody expected.

[inteller]

well, in all fairness CNY did come earlier this year, though I wouldn't make it the foundation of a sales loss excuse.

They are losing because of their branding decision. Now they compete in the same space as Palm and Samsung. Should have stuck to ODM....it worked out great with the 2125 and 8125.

[Fritzly]

Could the shortcoming be caused by:
1) Nothing really new and exciting? I mean really new and innovative models.

2) AFAIK in the US you can only buy HT products trough Carriers; a very outdated and faulty business model.

They would do much better setting up a web site like the Expansys one where you can choose and buy phones and PDA unlocked and without the software crippled by US Carriers.

[wardy]

Not a suprise really.

I will not buy off them as they do not support their products with needed ROM upgrades .

Nearly all the HTC models I have seen are now using DOpod ROMS etc as HTC do not support their products. How embarrassing huh HTC :oops:

Expect an even lower turn over next year HTC , unless you wake up a bit . Imate have an exciting new range coming out and their support is excellent...


Sorry have to say it as it is ...

[rich710]

If there not gonna be at least a "payable" upgrade to WM6 for my one month old Trinity, I will never more buy a HTC-device

[ADBrown]

It seems simple enough to me. What has HTC really done in the last few months that's compelling? They have a half-dozen different PPC phones which are all nearly the same in terms of specs, and not that different in design. The most exciting thing they have to offer is built-in GPS, and they don't even enable that in two of the three models that support it.

Thinks aren't much better on the Smartphone side, where the only really compelling offering that isn't still pre-release is the StrTrk, which has been out for months.

HTC really hasn't moved the ball forward lately. No improved screens, no new battery technology, no innovative form-factors. They seem to be, for reasons unknown, resting somewhat on their design laurels. Maybe their huge growth went to their heads.

As strange as it sounds given recent history, i-mate's upcoming units appear much superior to HTC's.

[virain]

Couple things are needed to be mention here:
1) Consumers re waiting for a WM6 release, why would you buy older version today if you can buy newer one tomorrow?
2) Latest devices are not something new, that would catch an eye of power user, who wouldn't mind to spend upto $1000 for a new toy. In fact, they are pretty shaby , and would be better suited to be sold by a careier with a plan.
3) New devices introduced lately by other brands, I-mate for example, are much more powerful and "sexy" than what HTC has to offer.
So, let's hope HTC will get on the right track after this cold shower of earnings. 0X

[virain]

Couple things are needed to be mention here:
1) Consumers re waiting for a WM6 release, why would you buy older version today if you can buy newer one tomorrow?
2) Latest devices are not something new, that would catch an eye of power user, who wouldn't mind to spend upto $1000 for a new toy. In fact, they are pretty shaby , and would be better suited to be sold by a careier with a plan.
3) New devices introduced lately by other brands, I-mate for example, are much more powerful and "sexy" than what HTC has to offer.
So, let's hope HTC will get on the right track after this cold shower of earnings. 0X

[Yata]

It's not surprising when you consider that they've lost two big customers recently (i.e. O2 and i-mate).

I think their move into self-branded units is going to back-fire on them. What made them popular with the carriers was that they were an ODM. Now they've got to compete with Nokia, Sony Ericsson, Motorola and Samsung on brand strength and that's never going to happen.

[nutzareus]

It seems simple enough to me. What has HTC really done in the last few months that's compelling? They have a half-dozen different PPC phones which are all nearly the same in terms of specs, and not that different in design. The most exciting thing they have to offer is built-in GPS, and they don't even enable that in two of the three models that support it.

Agreed. Same processors, same internal hardware, just repackaged in different casings. Enterprise customers expect at least 2-3 years from a device, so spitting out new devices every 3-6 months does them no good. Do you see new Blackberrys every 3-6 months? NO! If you are reading this HTC, how about FIXING the existing problems in the Wizard and Tornado, and release Windows Mobile 6 for them! I will not buy the Hermes or StarTrek or recommend them for anyone. If we are locked in 2-year contracts with these phones, the carriers and the manufacturers should support them for 2 years also!

[nutzareus]

As a followup example to the enterprise customer, I noticed that Unisys employees are still using their Sprint PPC-6601 (HTC Harrier, CDMA cousin to HTC Blue Angel) PocketPC phones. This phone was introduced in... fall 2004!

[cameron]

One number does not a trend make folks.

Look at the January release - year over year January sales were up approx. 10%. The press release doesn't really give any details, but the fact that one month (a ridiculously short period of time) is down means absolutely nothing.

Show me sales down over a quarter or over a year and then we can talk about something.

[JesterMania]

Could the shortcoming be caused by:
1) Nothing really new and exciting? I mean really new and innovative models.

2) AFAIK in the US you can only buy HT products trough Carriers; a very outdated and faulty business model.

They would do much better setting up a web site like the Expansys one where you can choose and buy phones and PDA unlocked and without the software crippled by US Carriers.

I agree 100%. Their devices are not only exactly the same (with certain features disabled per model to differentiate them), but they have not seemed to make much effort getting into the consumer industry. How many TyTN-like devices are we going to see until they come up with something truely unique in design and stylish to the average user? For me, the TyTN is fine, but not to the average user who takes style over functionality. Even a lot of us tech-savvy users here are starting to feel their designs getting old and plain.

Secondly, this is so true that it's hard to get HTC products. Here in Canada, we need to search high and low, scouring the few stores that actually import these devices and wading through skimpy, high-priced selections. The carriers here are no use either, rumor has it that one of our largest GSM carriers (Rogers) is about to get the TyTN soon - and how long as that been released to the world now? :roll:

Old technology, plain designs, hard to buy. Don't get me wrong, I like HTC and wish them success (not many people are willing to manufacture quad-band GSM devices - look at O2) but with their current business model they won't survive 5 years down the road.

[Nurhisham Hussein]

Wow! I didn't expect this many responses!

One number does not a trend make folks.


Absolutely right, the Feb 2007 numbers do seem like a statistical blip, but I think there are some grounds for concern.

2006 revenue growth was 45.9% over 2005, and Jan/Feb revenue growth last year were 71.1% and 89.8% over 2005. Compare that against 10% sales growth in January 2007 and -15.6% in February 2007 - while I don't think that they're going to get into negative sales growth for 2007 as a whole, the fact that revenue growth has slowed dramatically makes me question their strategy. I'd be especially concerned if I were an investor, and just watched the share price tank (as it did in December).