One M8 selling faster than last year's flagship, could lead to profit: HTC

Taiwan's HTC said it is selling new flagship smartphone One M8 quicker than its predecessor, and that the strong showing will help it claw back market share in developed markets such as the U.S.


HTC's market share has steadily declined since the company briefly topped the smartphone market in 2011, exacerbated by sales of previous flagship One M7 failing to match the phone's critical acclaim.


HTC is keen to avoid a similar outcome this year by accompanying the M8 upgrade with "more effective and efficient marketing," Chief Financial Officer Chialin Chang said at HTC's quarterly investor conference on Tuesday. "In 2014, we intend to sell more units of the M8 than the M7, which was already the best-selling model in HTC history."


Even so, HTC expects revenue to land in a range of T$65 billion ($2.16 billion) to T$70 billion in April-June, slightly below the T$71 billion of the same period a year earlier. That would nevertheless be about double the T$33 billion booked in January-March, when HTC reported a net loss that was wider than analysts estimated at T$1.88 billion.


The first quarter finished in March with HTC ending 28 months of on-year sales declines. HTC logged another sales rise in April indicating strong shipments of the M8, which was released in late March around a year after the M7. HTC shipped 3.4 million M7 handsets in the second quarter of last year compared with expectations of nearly twice that amount, estimated Yuanta Securities analyst Dennis Chan.


Sales of the M8 have exceeded M7 sales in the same time frame, Chang said on Tuesday, without providing figures. Chang also said HTC is likely to break even or book a profit for the first half of the year.


Shares of HTC closed up 3.6 percent ahead of the briefing, reaching a nine-month high on expectations of a strong revenue forecast. The benchmark Taiwan SE Weighted Index ended up 0.5 percent.


HTC's future is not as dependent on its flagship model in advanced markets as it once was, as sales of lower-priced models in emerging economies are growing at an increasing rate. The high-end market is slowing from its peak of just a few years ago when HTC, as a relative unknown, pitted itself against established consumer technology companies such as Apple.


"If you want to grow share as a vendor it is hard to do so if you just rely on one model that costs over $600," as Apple did until recently with its iPhone, said Gartner principal analyst Annette Zimmermann. Addressing that sentiment, Chang said HTC will "dominate the mid-tier" and "participate in the affordable segment", which he defined as prices in a range of $150 to $200.


The smartphone market is likely to grow 19 percent this year from 39 percent in 2013, showed data from researcher IDC, threatening prospects for all stakeholders from leading vendor Samsung to fast-rising entrants such as Huawei.



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