After HTC cut its second-quarter revenue outlook by almost 30 percent following a shareholders meeting last week, it experienced an almost 10 percent drop when trading was concluded on Monday, its biggest slump ever.
According to HTC, there is now a slower demand for high-end devices that run on Google's Android OS. Moreover, the company acknowledges weaker-than-forecast sales in China.
"Increased competition has raised operating costs for product promotion," added HTC as another consideration for its woes.
Wanli Wang, an analyst at CIMB Securities in Taipei, estimates that HTC's global market share is now less than 2 percent, which is a steep drop from the almost one-in-10 share that it had enjoyed at its peak in 2011. That time, the company's shares were worth 15 times more than they are today.
"Traditional smartphone makers like HTC think as long as they make the best hardware, they'll be able to sell well," said Wang. "That's just not the case anymore."
Even in the company's home base of Taiwan, HTC has fallen behind Apple and Asus Tek Computer Inc., a domestic-based company, according to the data from IDC.
HTC had previously estimated its second-quarter sales to earn somewhere between $1.48 and $1.64 billion. Now, the company has lowered it, forecasting instead that its second-quarter sales should be somewhere between $1.07 and $1.17 billion.
"We believe the management continued allocating resources to the unattractive product portfolio and failed to recognize the changes in the competitive dynamics," said a brokerage firm from Europe.
The company's poor performance prompted newly appointed chief executive Cher Wang to apologize to shareholders during the company's annual general meeting that was concluded recently. She acknowledges there are flaws in the company's marketing strategy, which she describes as "overly traditional."
"They thought that advertising was enough to get their message across," said Daniel Lin, strategy director at the Taipei-based brand consultancy Direction Design Group. "That can't work when the message is unclear to begin with."
Wang said that the company had already ended its collaboration with Robert Downey Jr., more popularly known for his role as Iron Man. The actor represented the company in a high-profile advertising campaign that featured its flagship device, the HTC One.
One of its most admired devices is the HTC One M9. However, it has failed to even match the attention that is being given to rival devices such as Apple's iPhone 6, the Samsung Galaxy S6, and China's Xiaomi.
Still, HTC has no plans to retire from the field yet as the company hinted on launching a new flagship before the year ends. The company also adds that it will "aggressively develop new business opportunities beyond smartphones."
Photo: Karlis Dambrans I Flickr
