HTC Introduces One M8 Smartphone in Bid to Restore Earnings

Mar 26, 2014 3:02 am ET

(Updates share price starting in second paragraph.)

March 26 (Bloomberg) -- HTC Corp. released a new version of its mainstay One smartphone, a device it’s counting on to help restore profitability.

The HTC One M8 features a 5-inch (13-centimeter) high- definition screen, Qualcomm Inc.’s Snapdragon 801 processor and a micro SD slot, the Taoyuan, Taiwan-based company said in a presentation yesterday in New York. Its physical design mirrors that of last year’s HTC One model, which suffered production delays and a shortage of components. The shares rose to their highest level in four months.

Nine consecutive quarters of sales declines pushed HTC to its first annual loss last year as its marketing budget shrank, and it faced stiffer competition from Apple Inc., Samsung Electronics Co. and Lenovo Group Ltd. devices. HTC has worked to solve production problems it faced last year, and a wider lineup of mid-range phones will help it reach more consumers this year, Chief Financial Officer Chang Chialin told investors last month.

“The new HTC One is certainly an impressive device -- the design is stunning,” said Avi Greengart, an analyst with Current Analysis who was at the HTC press event. “It should sell well to early adopters who are looking for premium design, but HTC will need effective marketing to break through to mainstream consumers who are starting, and usually ending, their buying process with Apple or Samsung.”

Verizon, Sprint

Shares of HTC rose 1.6 percent to NT$155, the highest close since Nov. 27. The benchmark Taiex index added 0.6 percent.

Pre-orders for the One M8 started yesterday at U.S. carriers Verizon Communications Inc., Sprint Corp. and AT&T Inc., which is selling the phone at $199.99 on a two-year contract. The device will be available at all major carriers in April.

The phone’s camera will automatically sync photos and video so they’re stored online. The device includes free replacement of broken screens for the first six months.

HTC is betting features like those will succeed where the previous One model fell short. A sleek metal case, a new camera that captures more light and stereo speakers weren’t enough to end a sales slump when HTC introduced the second-generation One in February 2013. A limited supply of the camera’s components was among the bottlenecks that forced HTC to delay a wider release of the device by about two months.

Gary Oldman

Revenue dropped 30 percent last year to NT$203 billion ($6.6 billion). A loss is expected by analysts this quarter. The company faces a trough in sales before revenue increases sequentially through the year, it said last month.

Sales of the One product line rose in 2013 from the prior year, with a drop in other models contributing most to the decline in revenue and income, Chang said.

To ensure the new One device helps reverse those declines, HTC is starting an advertising campaign on TV and billboards to highlight the critical acclaim it has received. The commercials, with actor Gary Oldman and the slogan “Ask the Internet,” were scheduled to start running last night in prime time in the U.S., said John McGonigle, an executive vice president at advertising firm Deutsch, which represents HTC.

The company previously signed Robert Downey Jr. to star in its commercials.

In addition, HTC is preparing to release its first wearable device by Christmas, Wang said in an interview last month. Executives were to give a private preview of a watch based on Qualcomm’s Toq design platform at the Mobile World Congress trade show last month, a person with direct knowledge of the plans said then.

--With assistance from Amy Thomson in London.