Troubled HTC to restructure as smartphone shipments plummet

Taiwanese smartphone supplier HTC is to embark on a major restructuring programme as it tries to establish its focus on new areas and return to profitable growth around its core smartphone offering.

Once a key innovator and a top-ranked supplier in the smartphone market, HTC was squeezed out by the dominance of Apple’s iPhone and the emergence of Samsung as a major player.

In Gartner’s most recent statistics on global smartphone shipments, released in May 2015, HTC did not even feature in the top 10 suppliers, being outclassed by the likes of Huawei, Xiaomi and ZTE.

HTC’s most recent quarterly results revealed an operating loss of NT$5.1bn (£108.1m) with operating margins of -15.6%, and a net loss after tax of NT$8bn.

It blamed this on weaker-than-expected demand in high-end smartphones – consistent with the state of the Android market – and weak sales in the crucial Chinese market.

Analyst Calvin Huang of Taiwan-based Sinopac Financial Holdings told Bloomberg that HTC’s cash was now the only asset of value to shareholders.

“Most of the other assets should not be considered in their valuation because there are more write-offs to come and the brand has no value," said Huang.

The business’ realignment will see HTC streamline its operational expenditure by about 35%, which will include an estimated 15% reduction in its worldwide headcount – around 2,500 people.

Besides a greater focus on its efforts in the smartphone sector, it also plans to double down on virtual reality technology and connected lifestyle products, such as wearables.

“HTC is an inspirational company driven by innovative people,” said HTC chairwoman and CEO Cher Wang, who made a return to the company she co-founded in March 2015.

“Now, as we diversify beyond smartphones, we need a flexible and dynamic organisation to ensure we can take advantage of all the exciting opportunities in the connected lifestyle space.

“This strategic realignment of our business will ensure each product group has the right focus, the right resources and the right expertise to win new markets.”