HTC Corp. (2498), Asia’s second-largest smartphone maker, posted a record 79 percent drop in quarterly profit as competition from Samsung Electronics Co. and Apple Inc. (AAPL) drove down sales of the Taiwanese company’s devices.

Third-quarter net income slumped to NT$3.9 billion ($133 million), the Taoyuan, Taiwan-based company said in a statement today. That missed the NT$4.43 billion average of eight analysts’ estimates compiled by Bloomberg in the last 28 days.

HTC, maker of the One, Sensation and Desire handsets, lacked a “sense of urgency” while “bureaucracy crept in,” Chief Executive Officer Peter Chou said in an e-mail to employees in August. Gains by Samsung and Apple’s iPhone 5 sales and stronger competition in China from unbranded, or so-called white box, phones could hamper a rebound this quarter, according to Kevin Chang, an analyst at Citigroup Inc. in Taipei.

“HTC is likely facing further share loss in the U.S. and Europe” in the fourth quarter, Chang, who rates the stock sell, wrote in an Oct. 4 report. “While HTC was doing well in China in the third quarter, we believe the dramatic price declines and performance improvements of white box smartphones have dampened HTC’s momentum in China.”

HTC shares dropped 0.9 percent to close at NT$287 in Taipei before the earnings announcement. The stock has lost 42 percent this year, lagging behind a 7.7 percent advance in the benchmark Taiex index.
Revenue Miss

Third-quarter revenue fell 48 percent to NT$70.2 billion, missing the NT$75 billion average of eight analysts’ estimates compiled by Bloomberg in the last 28 days. The company on Aug. 3 forecast revenue of NT$70 billion to NT$80 billion. Operating income declined 76 percent to NT$4.9 billion, according to HTC.

Samsung, the world’s largest maker of mobile phones, last week reported record third-quarter operating profit, buoyed by continued gains by its Galaxy phones and tablets. Sales of the Galaxy S III passed 20 million units in the 100 days after its debut, the company said last month.

Apple sold 5 million units of its iPhone 5 in the first weekend after sales commenced in nine countries on Sept. 21, it said at the time. The Cupertino, California-based company began selling the device in 22 more countries on Sept. 28.

HTC needs to “kill bureaucracy” as “we have people in meeting and talking all the time but without decision, strategic direction or sense of urgency,” Chou wrote to workers in an August e-mail obtained by Bloomberg News. “Stay firm with the hero innovations,” he wrote.

Fourth-quarter net income may drop to NT$5.2 billion, the fifth consecutive decline, on revenue of NT$76.5 billion, according to estimates compiled by Bloomberg in the last 28 days.

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What always amuses me about HTC is their bizarre product naming convention and constant release cycle. For example, they currently have two phones called HTC Windows Phone 8X and HTC Windows Phone 8S, then on Android, they have the HTC One S, HTC One V, HTC One XL and the HTC One X, and have just come out with the HTC One X+.

I mean seriously, do you really need 5 variations on the one phone?

^^ I guess all of them are having different specs. So what's wrong?

HTC needs to remodel their business just like the One series inspired for.
Good theory, terrible practise.

They have to realize they aren't competing with Apple or the other OEMs, but with Samsung.

They should make a unique clean design hardware.
Then really alter Sense so that the customizations to stock Android are for the better (take some cues from MIUI, AOKP, Paranoid etc etc).
Then they should price it aggressively and market the hell out of it.
... this would be them selling at a loss.

But next quarter, market slightly less and increase prices slightly.
They have what it takes to match Samsung, they just need to competent enough to do it.

(PS no locked bootloaders, no carrier bloatware)

Update:
HTC made just $34 million last quarter, its lowest profit since 2004