HTC burned another $101 million in the last three months

As day follows night, it's another story about HTC losing money.

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Daniel Cooper
February 3, 2016 2:19 PM
HTC burned another $101 million in the last three months

Much as we'd like to sugarcoat it, the unfortunate truth is that HTC is in trouble, and the situation is only getting worse. The phone maker has posted a third consecutive loss-making quarter, eating around $101 million (£69.6 million) in the last three months. A side-by-side comparison of the same period last year is even more doom-laden, since when it was generating a profit, it was only squeaking a meager $5.6 million. Last year, we asked if HTC was going to be the first really big Android manufacturer to slide into the sea. On this evidence, there's very little that's going to change our mind.

HTC's euphemistic press release talks about "good momentum" for its (lower-end) Desire phones as well as the A9 being "well received." Unfortunately, that hasn't translated into sales, or critical acclaim, since our Chris Velazco said that the A9 was not "the winner this company needs." The firm has also talked up its cost-cutting processes that are designed to make the company much leaner. HTC was able to shave a few million (Taiwanese) dollars from its operating costs by hacking chunks out of the Marketing and R&D budgets. Unfortunately, if a firm can't spend its way out of trouble, then cutting R&D spending is only likely to prevent it from being to innovate its way to future success.

Now, the firm does have $1.1 billion in its back pocket, which means that it could live off these savings for at least another year without breaking a sweat. That should give the company time to reinvent itself as a leaner, meaner manufacturer of mobile devices. Unfortunately, the bottom has fallen out of the mobile market, and even Samsung is struggling to deal with missing profits and drooping sales. In fact, it's possible that Android will never be a profitable business for anyone ever again. After all, Chinese manufacturers like Xiaomi are capable of knocking out dirt-cheap handsets that aren't garbage for near cost price.

HTC does have one slender hope, and that's if its gambles with health and virtual reality pay off in a big way. The company launched its first wearable "ecosystem" with Under Armor at CES and has the brilliant Vive headset coming out shortly. But there's no guarantee that either product will be a success, especially such a late-to-the-game fitness tracker like the UA Band. The Vive, meanwhile, is a deeply compelling product, but questions over its price and how mainstream VR is likely to go means it might not be an instant hit. Unfortunately, HTC needs an instant hit, or else.

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