HTC Profit Drops Sharply

Taiwan-based handset maker HTC has released Q3 results that were substantially lower on a year-over-year basis. The company posted revenue of $2.4 billion during the quarter, nearly 50% lower than last year's Q3. Net profit dropped more steeply, coming in at $133 million, or 79% lower than in the same period the previous year. The latter figure was well short of what was expected from a Thomson Reuters I/B/E/S survey of analysts tracking the firm.

The company's revenue and net figures are unaudited.

The relatively weak results come on the heels of a shift in strategy. After toiling in relative obscurity for years as a contract manufacturer for other companies, HTC rose to prominence as a lower-cost brand strongly identified with Google's (Nasdaq: GOOG  ) Android operating system. Lately, however, the company has concentrated on the sale of premium, high-end products such as the One line. That effort doesn't seem to be producing rewards; since Q4 2011, HTC's profit has dropped continuously.

The company's fortunes are in direct contrast to those of the current top handset manufacturer, Samsung. Propelled by handset sales, the South Korean company last week announced its fourth straight record quarter, with its highest-ever operating profit of $7.2 billion. Samsung is currently the top cell phone manufacturer in the world in terms of sales, and its Android-powered Galaxy phones have sold briskly on the market. It, Nokia (NYSE: NOK  ) , and Apple (Nasdaq: AAPL  ) , currently the No. 1, 2, and 3 handset makers, together were responsible for nearly 50% of all sales to end users in Q2, according to research firm Gartner. The combined unit sales of Samsung and Apple rose 43% year over year in Q2 of this year, while those of rival manufacturers declined 16%.

Eric Volkman owns shares of Nokia. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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