The results continue the pattern of the rest of 2012 for HTC. The Q3 results saw a similar year-on-year decline in sales and profits, but Q4 results are poorer with a clear sequential (quarter-on-quarter) decline present (relatively unusual when moving from Q3 to Q4). The results were also slightly below market expectations, with analysts originally expecting a net profit of NT$1.47 billion according to Reuters, and are the smallest quarterly profit HTC has made in 8 years.
HTC did release its new Windows Phone 8 devices during the quarter, although the HTC 8S was only available in significant quantities in the last two weeks of the year. HTC also released a number of Android products, including the Droid DNA (and variants), during the quarter. However, it is difficult to assess the impact of these new products as it is still early in their product life cycle and HTC did not release any additional comments or shipment numbers with the unaudited numbers.
As we noted in our earlier story HTC's relatively poor results are not a surprise, with the company's future prospects dependent on both the trajectory of Windows Phone and whether it can rebuild its Android device sales:
In the short term HTC will face further poor quarterly results in Q4 2012 and Q1 2013, with longer terms results dependent on both the trajectory of Windows Phone, and HTC's ability to produce hit models in 2013.
A primary concern for HTC will be avoid a further slide, which would see the company posting a loss. It should be possible to avoid this as the company does seem to be demonstrating relatively strong operating expenditure control in the face of volatile sales figures. But, more importantly, as with all mobile manufacturers there's a constant need to refresh the product line and this requires a certain amount of expenditure. Thus HTC needs to maintain a certain level of sales to support its product development roadmap. In the short term this should not be a major issue, but any further fall in sales could be very dangerous for the company.
