HTC Sees Profit Drop as Samsung Eats its Android Lunch

Samsung wasn’t the only smartphone maker which revealed its quarterly earnings today. HTC also posted its Q4 2011 results, but unlike Samsung which had a record quarter, it actually reported a drop in its operating profit, for the first time in the last two years. Its net income in Q4 dropped 26% to $364 million, below analyst estimates. Its revenues were down 2.5% to around $3.35 billion.

Apparently, its unit sales dipped more than expected, due to the increasing competition in the smartphone space. Its smartphone shipments in Q4 were down to only 10 million units, and are expected to slip further to 8.5 million units in Q1 2012.

“Severe competition at the high end from Apple and Samsung forced their sales lower during the quarter. The key is when they can find their competitive edge, which may not happen until the second quarter at the earliest,” said a Nomura analyst.

HTC is slated to launch some new devices at CES 2012, which will start next week. If any of those devices turn out to be a hit, they could boost HTC’s sales in Q2 2012. However, given the very competitive nature of the smartphone market, that seems increasingly unlikely. While Apple has its own platform, Samsung has become the preferred manufacturer for the Android platform, and Nokia has become the flagship manufacturer for Windows Phone. HTC runs a real risk of becoming irrelevant fast, if it doesn’t move soon.

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