World Biz  |  FEBRUARY 20, 2013 1:10AM

HTC One Smartphone to Reverse Sales Slump

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htc-one-smartphoneHTC Corp. released its most important product for the year, the HTC One smartphone, in an attempt to revive its fortunes after market share and revenue halved in 18 months.

The handset includes stereo speakers, media features and a camera that captures 300 percent more light than any other smartphone, according to the company, and was unveiled by Chief Executive Officer Peter Chou in London yesterday. Competitors Samsung Electronics Co., Huawei Technologies Co. and ZTE Corp. have eroded sales at the company whose HTC Dream was the first Google Inc. Android handset when it was released in 2008.

“I could see it being a hero product for them, a halo product,” David McQueen, an analyst for market researcher Informa Telecoms & Media, said in an interview at the event. “They’ve gone back to their knitting, back to the high end.”

The device, to be available from more than 185 mobile operators and retailers worldwide starting in March, will be key to determining whether Taoyuan, Taiwan-based HTC’s profit rebounds after five quarters of decline. Still, the improvements are only a step ahead of competitors, such as Apple Inc., and Sony Corp., which are expected to unveil their own new devices soon, McQueen said.

“This is their most important product for the year and will determine whether earnings double or halve in 2013,” Lu Chia-lin, who rates the stock hold at Daiwa Securities Group in Taipei, said before details of the device were announced. “They’re already in a vicious cycle of failed launches leading to lower brand awareness which hurts future releases.”

Global Ranking
HTC’s global smartphone ranking dropped to eighth in the fourth quarter, from fourth six quarters earlier, as Asian competitors offered a mix of cheaper and more-advanced devices. The company’s stock is down more than 70 percent since a 2011 peak.

HTC posted earnings per share last year of NT$20.16, down from NT$73.32 a year earlier, according to data compiled by Bloomberg. A successful product release could boost EPS to NT$40 this year, while a “mediocre” device may see it fall to NT$10, Lu said by phone.

The latest handset includes front-facing stereo speakers and a Blink Feed feature, which offers access to social media and news feeds. The HTC One uses a Qualcomm Inc. Snapdragon 600, quad-core processor and has 32 gigabytes of storage, and there is also a 64 gigabyte version in some markets.

Component Shortages
HTC shares are down 6.2 percent for the year in Taipei, compared with a 3.4 percent gain in the benchmark Taiex index. This year’s decline follows a 40 percent drop last year and a 42 percent slide in 2011.

Component shortages and product defects hampered sales of the One series of handsets, which were unveiled a year ago, before new models from Samsung and Apple Inc. added to competition globally. The One series, unveiled in February last year and released in April, came in three basic models. One X, its high-end version featured a 4.7-inch screen, the One S had a 4.2-inch display and slower processor, and One V had a 3.7-inch lower-quality screen.

“They need to avoid a repeat” of the release of the series last year, ”which had many complaints right from launch,” said Jeff Pu, who rates HTC add at Fubon Financial Holding Co. in Taipei. “Marketing has also been a weakness in the past and they’ve learnt to do more localization.”

Local Marketing
The success of its Butterfly handset, released in selected territories including Japan and Taiwan in the second half of last year, has taught HTC that adjusting its advertising for local markets can be successful compared to global campaigns, Pu said.

HTC will also benefit from stronger support from mobile operators who are seeking alternatives to the iPhone, which commands higher operator subsidies that cut into profits, Pu said. More operators are likely to offer the new device compared with the One series released last year, he said.

AT&T Inc. in the U.S. and EE, the U.K. joint venture of Deutsche Telekom AG and France Telecom SA, were among carriers that said they would offer the new smartphone.

HTC’s revenue last quarter dropped to NT$60 billion ($2 billion), less than half the NT$124 billion it posted in the second quarter of 2011 when it was the world’s fourth-largest smartphone vendor at 10.7 percent share. Its plunge to eighth, with a 3.1 percent share, puts it behind BlackBerry, according to data from Bloomberg Industries and IDC Corp.

Five of 34 analysts surveyed by Bloomberg, or 14.7 percent, now rate the stock a buy compared to 77 percent in August 2011.

“We see this as huge opportunity for us to bring new excitement to the smartphone experience,” CEO Chou said. “We as an industry need a new approach to the smartphone.”

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