Troubled Taiwanese smartphone maker HTC cut its revenue forecast for the second quarter of 2015, citing “slower demand for high-end Android devices and weaker than forecast sales in China”.
The company has also trimmed its gross margin forecasts, primarily on product mix change and reduced scale. At the same time, increased competition has raised product marketing costs.
In a statement, the company said it is “enacting measures to further improve operating efficiency”.
It also said it has “embarked on a comprehensive review of our assets based on current business conditions and future operational needs”, resulting in a TWD2.9 billion ($93.4 million) impairment charge for idled assets and some prepaid expenses.
The news comes at a bad time for the company: with the recent launch of its flagship One (M9) smartphone, it would be hoping to be seeing an upward trend. Its main rival, Samsung’s Galaxy S6 line, is believed to be performing well.
May 2015 sales of TWD10.79 billion compare with TWD21.07 billion in May 2014, and with TWD13.54 billion in April 2015.
Cher Wang, chairwoman and CEO of HTC, said that the company has identified “four key business goals” for this year: strengthening the competitiveness of its smartphone business; reducing operating costs and increasing operational efficiency; improving its organisational alignment and streamlining business processes; and to “aggressively develop new business opportunities beyond smartphones”.
“We have full confidence in achieving our vision and maximising shareholder value through our world-class innovation and by seizing the existing new business opportunities in the connected lifestyle space,” she continued.
HTC started some alarm bells ringing when it reported poor sales for April 2015, with reports it had seen weak demand for the One (M9).
A number of criticisms have been levelled at the device, including a lack of real innovation over its preceeding One (M8), a poor camera performance, and heat issues related to its use of Qualcomm’s Snapdragon 810 processor.
The company is now anticipating revenue of TWD33 billion to TWD36 billion, compared with its prior guidance of TWD46 billion to TWD51 billion. Gross margin is expected to be in the 19 per cent to 19.5 per cent range, down from 23 per cent to 23.5 per cent.
And EPS is expected to be negative TWD9.70 to TWD9.94, compared with a profit of TWD0.06 to TWD0.34.