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Cue the Tissues: HTC Blames 70 Percent Net Profit Drop on iPhone 4S

HTC One press conferenceStop us if you’ve heard this one before: A manufacturer specializing in Android handsets unleashes a dizzying torrent of models to confuse customers, then blames a steep drop in net profit on one device sold by a rival.

Reuters is reporting that HTC’s 70 percent fall in net profit in Q1 2012 can only be blamed on one thing: Apple’s iPhone 4S. The Taiwanese handset manufacturer has failed to keep pace with both Apple and rival Android handset maker Samsung, and now the financials have come home to roost.

“A major challenge we faced last year was the big drop in sales in the U.S. because of competition from the iPhone 4S,” explained CEO Peter Chou on Tuesday during a briefing with analysts.

As recently as last year, more than 50 percent of HTC’s fortunes came from the United States, where the company has offered a dizzying array of models spread across all four major carriers. A big chunk of Android’s growth spurt can be linked to the success of HTC and Korean rival Samsung, whose Galaxy device line is another thorn in the side of the Taiwan company.

“This is a difficult war; the market will be focusing more and more on HTC’s profit and value,” explains analyst Dale Gai from Barclays Capital. “HTC has said it will return to normal levels, but I don’t think it will be able to go back.”

Chou also seems to feel that its best U.S. days are now behind HTC, with 1.5 million USD net profits for the first quarter, just behind analyst predictions. The manufacturer is in the process of rolling out its new HTC One line which aims to simplify the company’s product offerings.

“I feel that HTC is being reborn this year, in terms of product strategy and execution of global sales and marketing,” Chou said. “We are a new HTC; HTC One will help us to reach this goal.”

Of course, Samsung and Apple won’t exactly be sitting still this year — a new flagship Galaxy S III handset appears imminent from the Korean company, and the rumored iPhone 5 is likely to appear in October from Cupertino as well.

Follow this article’s author, J.R. Bookwalter on Twitter

(Image courtesy of LaptopMag.com)



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