HTC has another tough quarter, with revenue down 13% YOY, but smaller losses

HTCs latest financials make for anotherfairly dismal read for the mobile device and VR headset maker, though crumbs of comfort its making a slightly smaller year-over-year loss. Itsoperating loss for Q4 2016 was NT$3.6 billion ($116.8M) vsa loss of NT$4.1 billion ($133.1M) in Q4 2015.

Revenue for Q4 2016 wasalso down at NT$22.2 billion ($720.7M), which is a year-over-year drop of around13 per cent. Not great news, clearly, but less of a YOY revenue slide than in otherrecentquarters.

However gross margin declined year over year too, dropping from 13.9 per cent in Q4 2015 to 10.5 per cent in Q4 2016. While HTCs year over year operating margin was almost the same, at -16.0 per cent for the quarter.

In its report for Q4, HTC claims robust sales performance and notes sequential revenue improving sequentially over 2016, though revenue was actually flat between Q3 and Q4 at a point in the sales cycle when you mightbe expecting a holiday boost to earnings.

HTC also flags what it describes as aggressively managed operating expenditure deliveringa 34 per cent cost reduction for the business over the course of the year.

But efficiency savings cant in themselves beget business turnarounds that requires a string of product wins. And virtual reality is a risky bet for HTC to be making for that, given the lack of proven consumer demand for such a nascent tech.

In recent years loss-making quarters have becomethe norm for the Taiwanese company, which posted its first ever loss making quarter in Q3 2013. Since then, the raft of management changes,portfolio tweaksand apartnership with games publisher Valve focused on virtual reality have yet to translate into any sustained upwardmomentum for HTCs business.

On the product front beyond itsongoing efforts to tout its Vive VR play Q4 saw HTCputoutseveral mid tier handsets badged withexisting/long-in-the-tooth brand names, such as Desire and Evo.

Notablyits since launched what it dubs a new direction for its phones business, announcing last month a new mobilebrand, HTC U, for a range of handsets pre-loaded with a newAI assistant. Not having amuch needed smartphone refreshready to go inQ4 clearlydidnt help its sales performance in the quarter.

HTC was also the design and manufacturing partner for Alphabets new Google-brandedPixel handsets, which launched during the quarter. Butthere are few signs thatrelationship has translated into substantial sales revenue for HTC.

Its Q4 report provideslittle detail on anyfuture plans, merelypointing to its continued investment of effort to tryto establisha sustained market forVR.

HTC continues to build the virtual reality ecosystem around HTC VIVE, with several events underlining the growing reach of the Vive platform, including opening the first VIVE-based arcade in Taipei, first demo days for VIVE X accelerator program in Beijing, Taipei, and San Francisco, and the launch of VIVE studios, it notes.

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