Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : HTC Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Eric L who wrote (255)	10/26/2012 12:34:49 PM
From: Eric L	Respond to of 273

HTC Earnings in Q3 (Presentation Link and an opinion) mzcan.com >> HTC's best move after Q4 outlook: Go white label Larry Dignan ZDNet October 26, 2012 zdnet.com HTC's financial picture continues to unravel and the fourth quarter will look much worse than the third. The company needs to go back to the future to save itself. HTC issued another horrible outlook for the fourth quarter as sales, operating margin and most financial metrics continue to head in the wrong direction. As for those metrics, HTC's financial health isn't so hot. Revenue was down 48 percent in the third quarter from a year ago. Earnings per share fell 79 percent. Operating profit was down 76 percent. Cash levels fell 45 percent. More worrisome is that it took HTC 48 days in the third quarter to turn over its inventory and a year ago it took 34. It also is taking HTC longer to get paid by its customers. We'll spare you the gory details, but the two slides anove from the company's earnings presentation tell you all you need to know about HTC's disastrous third quarter. And guess what? It gets worse for HTC despite a product refresh. Revenue in the fourth quarter is expected to be NT$60 billion, down from NT$70.2 billion in the third quarter. Operating margins will fall to 1 percent in the fourth quarter from 7 percent in the third. Add it up and HTC could face a cash flow squeeze in the not-too-distant future. When it comes to strategy, HTC's story is well known. HTC doesn't have the scale and heft to compete with Samsung and Apple. Unless HTC becomes a Windows Phone juggernaut and Microsoft's most valuable partner it's toast. In China, HTC has some momentum, but it has to play the value phone game. However, HTC could do a back to the future move. HTC started as a white label manufacturer. It basically made and designed phones for others. Then HTC became its own brand. HTC was hot for a while and a leader of the Android army. Then it got crushed. Given the financial picture, the most obvious move would be to go white label again. HTC can design well and could ultimately make devices for Microsoft, Google or a bevy of other non-hardware companies getting into the device game. Couldn't HTC ultimately manufacture an Amazon phone? You get the picture. The reality is that HTC doesn't have a power brand and isn't considered quietly brilliant. Meanwhile, HTC lacks scale. Before HTC's financial picture gets too out of hand, it should ponder going back to its roots. ### - Eric -

To: Eric L who wrote (255)	10/26/2012 2:56:24 PM
From: Eric L	Respond to of 273

Tero Kuittinen (for BGR) on HTC's Dismal Quarter ... >> HTC’s Deep, Deep Dysfunction Tero Kuittinen The Noy Genius Report (BGR) Oct 26, 2012 bgr.com HTC’s (2498) current tailspin? So bad it makes Nokia look like a growth company. HTC’s handset volume declined by -43% in the autumn quarter vs. Nokia’s -23% volume decline. This is very interesting because HTC is using Android, the world’s most popular smartphone OS that is powering 40% annualized growth among its vendors. Nokia is limping along with an unholy mix of the obsolete Symbian platform, the moribund S40 feature phone platform and a niche OS called Windows Phone. What this demonstrates is the extreme difficulty in competing against Samsung (005930) on its Android home turf. The global popularity of Android does not mean that it gives the vendors employing it any real advantage. On the contrary, it exposes second-tier Android brands to merciless head-to-head comparisons with Samsung. Samsung’s global smartphone volume soared in the third quarter to 56 million units, doubling in a year. HTC’s smartphone volumes crashed by 42% to just 7 million units during the autumn quarter. Weirdly enough, this means that Research in Motion (RIMM) actually surpassed HTC in global smartphone volume competition. RIM may be collapsing due to its ancient handset portfolio and badly aging operating system, but HTC’s brand new smartphones with cutting edge specs and the latest version of the immensely popular Android OS are actually losing market share more rapidly. It is the new model launches that make HTC’s 3Q12 performance so difficult to comprehend. Handset vendors sometimes tuck into 20-30% annualized volume declines when they are saddled with very old product portfolios. But HTC is now facing 40% volume decline with a fresh product mix. Several Desire-series models launched around June and should have boosted 3Q12 performance. They possess nifty features such as 233 PPI pixel density, enhanced cameras and sophisticated audio technology at prices typically a bit below equivalent Samsung models. And they are getting slaughtered in direct competition. Lack of differentiation using a leading mobile OS can be just as lethal for a handset vendor as being clearly a generation behind in hardware competition with an unpopular mobile OS. It is telling that even though HTC has issued sales warnings again and again and again in 2012, its 4Q12 guidance is still far below of what Wall Street was projecting. Exactly one year after HTC started issuing its string of warnings, industry analysts still cannot believe how epic its decline is. ### - Eric -