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Just how important is the U.S. market for global smartphone sales? Ask Taiwan-based handset maker HTC which today announced that U.S. Customs delays, along with sluggish European demand, were to blame for second-quarter profits falling more than 57 percent.
HTC’s unaudited net profit for April-June was $7.4 billion in Taiwanese dollars ($247.7 million), down from T$17.52 billion ($585 million) during the same period last year, Reuters reports. Analysts were expecting second-quarter earnings to approach T$8.25 billion, or $275 million, according to a Reuters survey.
June sales (including that of HTC’s One series) were T$30 billion ($1.03 billion), down 33.4 percent from the same period a year ago. The company also announced it would cut under 1,000 production line workers previously hired to handle a usually busy third-quarter.
HTC blamed the poor numbers on delays getting its new phones into the United States caused by losing a patent court case to Apple. The legal loss meant HTC phones are held up to undergo customs inspections. Also hurting HTC’s bottom line is the cratering of demand by European consumers fearing the next shoe to drop in the Eurozone financial crisis.
Samsung and Apple are also leaving little wiggle room for HTC. The South Korean Android smartphone producer and the Cupertino, Calif. iPhone maker have the high-end market to themselves, leaving HTC scrambling to find low-end buyers. The trouble is, analysts say, the Taiwan company’s phones are priced too high — particularly for the lucrative Chinese market. Couple that with the fact HTC is producing fewer phones and with slimmer margins and the company’s third-quarter results could also come into doubt, say analysts.
All of this puts even more emphasis on HTC’s new One series, a line of phones designed to counter the iPhone and the Galaxy S. Despite a profitable 2010, HTC has taken a drubbing at the hands of Apple and Samsung, the signs of which became visible in the second-half of 2011. It is uncertain whether the One will be HTC’s antidote to lukewarm sales, however. Not only is Samsung’s S III receiving positive reviews, a new iPhone is expected during the fourth-quarter with the traditional wave of consumer enthusiasm.
If all of that was not bad enough, HTC’s bad news came as its rival Samsung was announcing gargantuan profits fueled by demand for its smartphone.
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