HTC's second quarter results look better than first, but plenty of make-up work lies ahead. Promos for the new HTC One smartphone might help.
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HTC hit rock bottom during its first fiscal quarter for 2013 when it report revenues of just $1.45 billion. Its second quarter results, released Thursday, show that HTC might have turned the corner and halted its downward spiral. HTC reported revenues of $2.37 billion, which is up significantly compared to the previous quarter, although still down from the year-ago period.
HTC believes its third quarter will be an improvement thanks to strong interest in the HTC One, its new flagship smartphone, which recently went on sale in the U.S. and other countries. HTC cautioned, however, that margins will continue to be razor-thin thanks in part to boosted spending on marketing. The company's margins were a scant 0.1% during its second fiscal quarter, but will improve slightly to between 1% and 3% moving forward, it said.
The One is HTC's latest effort to win back market share from Apple and Samsung, which have buried it over the course of the last two years. It has seen steadily shrinking share thanks to the success of devices such as the iPhone and Galaxy S series. The One won critical acclaim from reviewers around the world.
In order to help, HTC is ramping up its marketing. The company has been more aggressive about pushing its new device with guerrilla campaigns. This week, it unfurled a limited-time promotion that runs between May 2 and May 5. HTC is offering between $100 and $375 to people who purchase the HTC One and then mail in their old smartphone. The idea is to get people to buy its new device. The gimmick might work. The traded-in devices, which must be functional, will probably be sold to a third-party company that refurbishes them, resells them, or both. In other words, HTC won't really be paying people $375 to buy its new phone, but that's the end effect.
HTC hopes these and other efforts will bear fruit. "We're improving the HTC marketing execution. It's the first time since HTC developed its brand that we are really integrating brand, product and marketing all together," said HTC CEO Peter Chou.
The One is going head-to-head with the Samsung Galaxy S 4, which also reached retail stores in recent weeks. Both devices offer many of the same features, including HD screens, excellent cameras, LTE 4G and more. Both run Google's Android platform and each has its own customized software. The One is made from aluminum, while the GS4 is made from polycarbonates. Both are being sold for $199.99 with new contracts. Given the feature parity between the two devices, marketing promotions such as the trade-in deal might give HTC an early lead.
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