HTC faces a ban on its smartphones in Germany, but not as a result of its various legal battles with Apple. This time, it has withdrawn its appeal against an injunction granted to patent troll IPcom. This the latest in a series of blows over the past few weeks, to a handset maker which had seemed to be leading a charmed life as it rode the Android wave. Now it is trying to calm investor nerves with promises of new, high impact smartphones and even a new twist on the mobile device segment, a hybrid tablet/Chromebook.
The Taiwanese company cut its fourth quarter revenue forecast by up to 23% last week and its stock has fallen in value by 61% since the end of April amid concerns that it does not have an effective response to rising competition from Samsung (and even from Nokia, in the mobile Windows market which HTC has always led). Its tablets have not made a big splash and it is embroiled in legal tussles with Apple, losing a case at the US ITC last week.
CFO Winston Yung used an interview with the Reuters news agency to try to improve sentiment, with promises of new products and a broader global reach – HTC is particularly concentrating on the sharp growth in Chinese 3G and smartphones. “I don’t think it’s so serious,” Yung said. “We have six quarters of improvement, the most conservative guidance is 45m units of shipments this year, a lot higher than 25m last year. We will focus on the product next year, better and more competitive. Other than new LTE phones for the US market, we also have phones for the global market. We will launch some worldwide flagship products. We’re confident in them.”
However, its recent downgrade of its Q4 sales forecast – to around $3.4bn, about the same as a year earlier – prompted at least six brokers, including Citigroup and Credit Suisse, to downgrade the stock. The company’s new guidance was “driven more by inferior product than by macro reasons”, wrote Citigroup analysts Kevin Chang and Jonathan Gu in a research note. “We are most surprised by the lack of visibility and by how fast things deteriorate in the smartphone business.”
As well as the promised new handsets, HTC is also reported to be entering the nascent market for Chromebooks, the clamshell thin clients running Google’s browser-as-OS. Only Samsung and Acer currently sell these products and sales are said to be modest, but HTC plans a hybrid design, according to Digitimes’ supply chain sources in Taiwan. This would apparently run both Chrome OS and Android in different modes, with the former being used for fast-boot, low power, web-based activities and Android cutting in for more processing-heavy tasks, and to support a touchscreen tablet mode.
Despite new products up its sleeve, HTC has suffered a new setback in Germany, where it has withdrawn its appeal against the injunction awarded almost three years ago, by a Mannheim court, to local patents hoarder IPCom. The smaller company says it will now enforce that ban “in the shortest possible time”. It added in its statement: “We will use the right awarded by the courts, likely resulting in HTC devices disappearing from shops during the crucial Christmas season.”
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