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HTC’s latest earnings miss is a dark omen for Samsung and even Apple

January 6th, 2014 at 7:45 AM
HTC Earnings Q4 2014

HTC reported another dismal Christmas quarter, posting a razor-thin $10 million unaudited net profit that missed analysts’ expectations by $12 million. And that profit was only achieved thanks to the company’s $265 million sale of its stake in Beats Electronics. This quarter was another letdown in a streak of bad reports that now extends to two years. But it wasn’t just another quarter for HTC — this was a crucial period for the company’s future. HTC launched its heavily marketed phablet, the HTC One max, in key Asian markets and in the United States in November. This was the phone that HTC absolutely needed to turn into a decent hit after the brutal disappointment its well-reviewed HTC One turned into during the summer.

But the HTC One max launch could not help HTC to even meet the rock bottom expectation of eking out a reed-slim $22 million net profit during the biggest quarter of the calendar year, even though the company had slashed its operating expenses to the bone. This is an ill omen indeed for HTC in the first quarter of 2014 as the HTC One aging process accelerates.

Samsung’s Christmas-quarter earnings expectations have fallen notably over the past two months, and Samsung had also launched a major new phablet during the period: the Galaxy Note 3. All in all, it does not look like some vendors are getting the earnings boost the expected from their new flagship phablets.

If Apple really decides to jump on the jumbo display bandwagon in 2014, it will be fascinating to see how the company opts to price the mega-iPhone. We may see steep price cuts in this segment come spring and summer.

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