Samsung Soars While HTC, BlackBerry Crash

Quarterly results released by BlackBerry, HTC, and Samsung are a study in contrasts as one company's fortunes mount and the others' sink.
Samsung's New Gadgets: Visual Tour
Samsung's New Gadgets: Visual Tour
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Samsung today issued guidance for its third quarter and predicted record profit thanks to brisk sales of smartphones. At the same time, BlackBerry revised its troubling numbers downward, and HTC reported its first-ever quarterly loss. The reversal of fortunes speaks to the cutthroat nature of the smartphone market, which won't spare companies that can't adapt.

Samsung told investors that it expects to record between $9.2 billion and $9.6 billion for the three-month period ending September 30. These numbers edge out the company's record second quarter this year by several hundred million dollars. Samsung can thank its robust financials on improved shipments of memory modules and smartphones. Analysts peg Samsung's quarterly smartphone shipments between 85 million and 89 million during the third quarter. The Galaxy S4 alone is responsible for more than 10 million shipments.

In stark contrast, ailing smartphone maker BlackBerry also reported its earnings, and the news wasn't good.

[ Can BlackBerry pull out of its death spiral? Read BlackBerry's 11th Hour: How It Can Survive. ]

For its second fiscal quarter of 2014, BlackBerry raked in revenue of just $1.6 billion, which represents a painful 49% drop from the previous quarter. The company was forced to write down $1 billion in unsold Z10 inventory and posted a loss of $965 million. Worse, BlackBerry quadrupled the costs associated with restructuring from $100 million to $400 million. The company has $2.6 billion in cash on hand and no debt, but some analysts believe BlackBerry will burn through its cash in as few as 18 months. It plans to lay off 4,500 workers by the end of the year, and T-Mobile retail stores in the U.S. will stop stocking BlackBerry handsets.

HTC's position is only somewhat better. Today, the Taiwan-based company recorded its first quarterly loss since going public in 2002. The company said its net loss was $101 million. The company will likely remain in the red through the fourth quarter as well. It has struggled this year in the face of stiff competition from Samsung.

The One, which HTC introduced in February, ran into production trouble due to camera modules and the aluminum needed for the frame. The device reached the market later than planned, hitting store shelves just days ahead of Samsung's Galaxy S4. The production trouble also led to sustained costs for the company, which it has been unable to reduce. These costs mixed with so-so sales of the One helped tip HTC's balance sheet into the red. The company recently let go of 20% of its U.S. staff and is reorganizing its remaining facilities. The company recouped about $265 million in cash by selling back its investment in Beats Audio. Some analysts think HTC should sell some of its manufacturing facilities to gather more cash.

Samsung's success has come at the expense of both BlackBerry and HTC. Samsung has shipped record numbers of smartphones, while no one lined up to buy BlackBerry'z Z10 and Q10 devices. The comparison is striking: Samsung is estimated to have shipped between 85 and 89 million devices during its most recent quarter, while BlackBerry shipped just 2.7 million. HTC's quarterly shipments aren't yet clear. Apple shipped 39 million iPhones during its most recent quarter.

BlackBerry's problems are different from those of HTC, but the companies find themselves in the same position: struggling to survive. The question is now, how do they move forward?

BlackBerry has received a buyout offer from Fairfax Financial and may be taken private by the end of the year. How this move will change its fortunes is unclear. HTC is nearing acquisition-target status. At this point, it's a wonder a stronger company such as Samsung or LG hasn't swooped in to take the reins.

In short, both BlackBerry and HTC face uncertain futures.

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