Despite currently offering what is arguably the best Android handset ever produced, things are going from bad to worse for HTC. The Taiwanese company’s profits have been heading the wrong way for a number of years, and in Q3, it expects to see its first operating loss since going public in 2002.
HTC actually believes that the flagship HTC One is performing well, outperforming last year’s models, and improving the consumer perception of the HTC brand. But it takes more than just one successful smartphone to keep a company afloat, and unfortunately, HTC is having to learn that the hard way.
The company expects its operating margin to fall between 0% and -8% in Q3, down from the 1.5% it saw in Q2; while its gross margin is expected to be around 18-21%, down from last quarter’s 23%. As for revenues, they’re expected to drop between NT$50 billion ($1.67 billion) and NT$60 billion ($2.01 billion).
That’s a significant drop from Q3 2012, and it’s even lower than analyst expectations of around NT$75 billion ($2.51 billion).
HTC insists the “lack of economy of scale” is partly to blame for its problems, as well as uncompetitive midrange products, and the cost it has endured clearing “aging products in the channel.” However, the company promises that “a range of innovative and competitive mid-tier products” will be here in the coming months.
As a result of that, and continued success for the HTC One, HTC expects Q4 to be a little better.