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Is HTC On The Verge Of Collapse? Taiwan Bank Proposes Bailout

Eric McBride
11

 

I’m honestly really starting to feel really sorry for HTC. Lately, The Taiwanese smartphone maker just can’t seem to catch a break, and things just seem to get worse and worse. The One Series isn’t selling as well as HTC had hoped it would, they’re reporting record low profit in multiple sectors, they were forced to sell half their share of Beats Audio in order to meet financial obligations, and, as reported yesterday, they will now have to take a 40 million dollar hit due to OnLive restructuring their company. HTC seems to be in really big trouble. So much in fact, that the Taiwan Central Bank recently proposed a bailout in an attempt to save the struggling handset maker.

HTC’s recent blow was actually no fault of their own. As we reported yesterday, Onlive, a popular cloud based gaming company, recently announced that they were in the process of restructuring their company, and that many employees would have to be laid off due to the high infrastructure costs of running their gaming platform. The problem for HTC is that back in February of 2011, HTC made a 40 million dollar investment in Onlive, with hopes that it would bring more online games to their phones. I personally thought that Onlive was a pretty awesome concept, and can understand why they made that investment.

HTC’s market share has dropped so dramatically in the past year or 2 (27% since Q2 of one year ago) that I can’t imagine at this point how they can get back in the game. The company is literally crumbling, and I really wonder how things got so bad for the company that delivered so many great devices.

Recently, the Taiwan Central Bank proposed a bailout in an effort to save the company, and when banks have to get involved with big corporations, it’s generally not a good sign. HTC is still a profitable company, but with such relentless competition from Samsung and Apple, their numbers are dropping fast enough that banks are beginning to get very nervous. Keep in mind that HTC is one of the biggest companies in Taiwan, and that the entire economy suffers when they do. HTC desperately needs to get back in the smartphone game, and the quicker the better. 

We don’t know if HTC will/has agreed to the bailout, or the details of how it would work if they did. I’m not expert on these kinds of things, but I honestly don’t know if it’s the best idea. On one side, a bailout could help to stabilize the company and create a bit more breathing room for them to rethink their strategy. On the other side, HTC is still making money (they are by no means flat out broke, but they simply cannot continue on the path they have been on for the past 2 years), and a new flagship device alone could possibly get them back in the game. That being said, HTC would still need money to aggressively market any new flagship device (ala Samsung and Apple), which is something they apparently don’t seem to have, but oh so desperately need. 

HTC has certainly brought us some amazing Android devices, and I honestly hate seeing them struggle. The Nexus One, Desire, Evo, Sensation, Desire HD, Desire S, and so many other phones have proven that they can make amazing phones, and I sincerely hope to see them overcome their financial issues and get back on track. 

What do you guys think? Can HTC bounce back with another flagship device? Is it really too late for the innovative company that brought us amazing devices like the Nexus One, HTC Sensation, HTC Desire HD, and so many more? Or is accepting a bailout the best way to go? Do they have a chance either way?

Let me know what you think in the comments below!

Additional statistics source: The Verge

Picture credits: HTC Logo edited by myself

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Comments

Write new comment:
  • kss imkum Aug 21, 2012 Link

    One thought hounts me,HTC did some bad things in the past. Pay it forward . No? anyone remember imate. I still have one!

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  • Eric McBride Aug 21, 2012 Link

    I still really hope HTC can somehow stage a comeback. Would be a real shame to see them fail.

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  • ljhaye Aug 21, 2012 Link

    This is a huge deal because this could be the precursor for other Android OEMs not named Samsung. We are watching consolidation in the Android phone market and it seems it will only be Samsung at the highend and ZTE and Huwai on the low end. Motorola and Google may fork Android themselves and give us a three way fight between google, apple, and samsung...

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  • ljhaye Aug 21, 2012 Link

    Still its amazing how fast HTC is falling...scary

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  • Eric McBride Aug 21, 2012 Link

    It really is. It really came out of nowhere!

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  • asdfgh Aug 21, 2012 Link

    This is utterly shameful - a diabolical article full of bullshit from start to finish. You've made up more than half of this nonsense. No-one anywhere has said that HTC is "on the verge of collapse" and I'd bet you haven't even read the original article on Fox Business reporting the story in the first place.

    Your piece doesn't even make sense - when was the last time you saw a company "still making a profit" yet "on the verge of collapse"?

    You should be ashamed of peddling such idiocy and I'm amazed anyone actually looks to you to cover such news.

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  • Eric McBride Aug 22, 2012 Link

    WOW! Big words asdfgh (nice user name by the way :-D).! No reason to get personal bro!

    More "utter nonsense":

    http://htcsource.com/2012/08/taiwan-central-bank-proposes-an-htc-bailout/

    Tech Radar agrees with the "nonsense":

    http://www.techradar.com/news/phone-and-communications/mobile-phones/htc-could-receive-government-bail-out-1091781

    Believe me bro..it doesnt take a rocket scientist to see how much trouble HTC is in. Seen their financials for the past 2 years? Guess not. Seen a big selling phone in a while from HTC? Seen any tablets making any noise?

    Remember, HTC doesnt have the advantage that Samsung, Sony, and LG all have in having multiple sectors to profit from. For HTC, its all about phones and tablets. Their numbers are not slowing, they are flatlining. Sure they pull profit, but what they actually pull is falling year on year, and in a huge way. In other words, if they keep dropping year on year as they are doing now, the company's profits won't be enough to keep them above water. That's collapsing bro, even if it is one year at a time.

    If you don't believe me, do some research, pull some figures, and get back to me.

    Take your time. I ll wait :-D

    Believe me..the LAST thing I want to see is HTC in so much trouble. I have owned 3 HTC devices and loved them all, and they are a huge asset for Android. But to deny how much trouble they are in is simply not realistic.

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  • Taran Aug 22, 2012 Link

    Don't spread wrong news if you don't understand financials.
    Read the news again:
    http://www.pcworld.com/businesscenter/article/261107/htc_loses_us40_million_from_onlive_restructuring.html

    HTC's $40M OnLive investment is over due to reOrg
    HTC has shifted focus to Magnet system, they made $35Million investment today. Rule#1 A collapsing company isn't allowed to invest

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  • Eric McBride Aug 22, 2012 Link

    These are 2 COMPLETELY different subjects Taran. In my article I also referenced the OnLive loss. I also discussed the Beats Audio sale due to financial obligations not being met.

    Onlive topic even had its own article along with being referenced in mine:

    http://www.androidpit.com/htc-loses-40-million-as-onlive-goes-bankrupt

    Onlive was mentioned in the very first paragraph of the article, and has nothing whatsoever to do with the proposed bailout.

    And remember..HTC invested in Onlive and Beats over a year ago, which were both very realistic investments. But HTC just sold half of the Beats stock back recently, as they apparently couldnt keep up their financial obligations.

    http://www.theverge.com/2012/7/24/3180380/htc-reportedly-didnt-meet-financial-commitments-to-beats?utm_source=dlvr.it&utm_medium=twitter

    Again..2 different topics :-D

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  • Taran Aug 22, 2012 Link

    "HTC seems to be in really big trouble. "
    Can you support that? Companies make investments and then disinvest, how can you conclude trouble from it?

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  • Eric McBride Aug 22, 2012 Link

    Bro! The bailout is one thing, but regarding HTC being in big trouble, look at the recent sales figures for the past 2 years! Year on year quarterly declines of almost 30%, pulling completely out of the Brazilian market, revenue decline of 27% in Q2, gross profit dropped 30%, and operating profit fell a whopping 60%!

    That doesn't sound like trouble to you?

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