Company Report
HTC Corporation is a well-known maker of Smart phones, window smart phones, android smart phones, touch phones, tablets, personal digital assistant phones, and panel computers. HTC also works for the research and development for their own products and sell its manufactured goods under company’s brand name i.e. this paper intends to discuss HTC Corporation, its financial reports and other related aspects.
HTC, headquartered in New Taipei, Taiwan, was founded in year 1997 by Cher Wang and Peter Chou. Company built a good market reputation in a short span of time due to its innovative and good quality products. Company always keeps customer’s requirements in mind while making their products. Company claims to be customer centric and produces customized products that suits to different categories of users. Some very famous handheld devices that company makes are HTC Desire series, HTC Butterfly series, HTC Sensation series, HTC One series, HTC Rhyme series, HTC explorer series, and HTC Radar series along with several others. HTC produces these devices and sells in domestic market as well as exports in foreign markets. Company has several achievements in its name by introducing some very modern, useful and technologically advanced products (htc).
HTC is presently among top five players in smart phone market and among top ten in mobile handset market. company is very well known for its innovative and value for money products. products developed by the company are desinged keeping in mind the requirements of target market. consumer today buy HTC smartpones because they have advance technology, easy to handle and maintain and provides good value to the consmers (Lai).
Country Report
Taiwan is an East Asian country and shares a very complicated relationship with its neighbor china. Taiwan has faced several phases of foreign rule from Japanese to Chinese. People of Taiwan are humble and laborious. Taiwan is a developed economy with a world ranking of 19th on the basis of purchase power capacity. Taiwan has lodged sustainable growth in its GDP of about 8 % since last few decades with agricultural contribution of 3 % and with 78 % contribution from service sector. Electronic, computer and information technology are on thrive and constitute a major part of Taiwan economical growth. Companies like HTC are leading the way of this industry and making new ways for economy of Taiwan (2013 Index of Economic Freedom).
Taiwanese business owners and investors have invested enormously in countries like Malaysia, Indonesia, Thailand, Vietnam and even mainland china due to some complex policies of central bank of China (Taiwan). Small and medium enterprises hold very significant place in the economy of Taiwan and they are in a large numbers which makes Taiwan an emerging hub of industries. After adopting liberalization, economy of Taiwan witnessed a ne wave of economic growth. London metal exchange approved Taiwanese metal exchange, Kaohsiung to trade in aluminum, lead, Zinc, copper and several other metals. London metal exchange also opened one of its regional offices in Taiwan the year 2013 in order to trade and produce metals on a worldwide level (2013 Index of Economic Freedom)
Today Taiwan is an active member of several eminent economic organizations like world trade organization, Asian development bank, Asia pacific economic cooperation, and also participates as observer in organization for economic cooperation and development. Taiwan on various national, regional and international forums represents its progressive economic views to benefit others and also adopts other’s views for own development. Taiwan shares very good relations and economic understandings with its neighbors and trade partners. Top trade partners of Taiwan are chime, Japan, European Union, US and Hong Kong.
Taiwan is a major player in information technology equipments. Taiwan supplies computer chips, networking accessories, computer memory and other accessories more than any other country in this world. Taiwan is also a major player in making and supplying of consumer goods, electronic products, LCD’s. Taiwanese exports are growing continuously at a massive scale which earns highly valuable foreign money, necessary for any economy. Textile is one major area that earns foreign money for Taiwan.
SWOT Analysis
Strengths:
- Right partnership is one of the major strengths of HTC. Company selects strong companies for partnership such as Microsoft that is giant player in information technology industry. Excellent partnership minimizes the risk of HTC while expanding business in international market.
- Well established brand with good recognition.
- Strong manufacturing capacity provides an edge to the company over its competitors which results in high quality of products and provides economy of scale.
- Excellence in hardware designing enables company to bring innovations and new technology to the market without losing hold on present products.
- HTC is an original design manufacturer (ODM) which saved cost for the company at different operational levels. ODM also enables company to minimize risks associated with market entry or business expansion (Kotler & Keller).
- HTC has good sales volume and high market share from operator business. Operator business generates good business at minimum promotional cost.
- ODM and operator business bring good margin to the company that is above than industrial average.
- 800+ patents, open and collaborative culture, and strong Research and development department.
Weaknesses:
- Low orientation towards customers and poor customer service.
- Majority of the HTC phones are touch screen hence they target sophisticated consumers.
- HTC products target middle to upper middle market segment due to above average price.
- Poor brand awareness due to limited promotional activities.
- Partnership with Microsoft for utilizing their platform; Microsoft is not an old and main player in smart phone market.
Opportunity:
- Smart phone market is gaining popularity and noticing a significant increase in users across the world.
- Android system presented by Google gained consumers attention; HTC can tap this opportunity by joining hands with Google to provide this system to end-user.
- HTC penetration and preference in US market is very low which is one the major market of smart phone. HTC can increase penetration in US market by focusing on promotional activities and implementing strong marketing strategy (MarketLine).
- Fifth generation technology is flourishing and fourth generation technology already captured market.
Threat:
- Continuously rising competition not only in domestic market but also in international market giving thought competitor to HTC.
- Various big companies such as Apple, and Samsung gained good market share in handset market.
- Market of system platform is also captured by Google, and Apple.
- Innovation and new technology has become major driving factor for smart phone users. It is essential for HTC to bring new and innovative technology to the consumers.
- Product life cycle is reducing and customer loyalty is evading.
- Tough competition is resulting in low margins which impacts company’s revenue if company is not achieving desired volume.
- Substitute products.
- Poor economic conditions
Financial Report
HTC is not showing good financial performance in year 2013. On June, 2013, company earned total revenue of TWD 70,666.92 and net income after tax TWD 1249.51. At the end of year 2012 company registered a fall in overall revenue and profit (HTC Investors).
In the year 2012 company’s revenue fall from TWD 463,878.90 to 282,914.70 which almost 40 percent drop in overall revenue during same year. Gross profit also follows the same pattern as revenue. In years 2010 and 2011 company registered good growth in gross profit and revenue; revenue of HTC increased by more than two times in these two years. Poor financial performance of company is reflected at all level; increased cost of goods, decrease in market share and reduction in sales volume. In year 2012 HTC tried to minimize its operating expenses but they were not sufficient to earn growth in revenue (Bloomberg Businessweek).
As on June 30, 2013 HTC return on assets is 1.79 percent, return on equity is 8.19 percent and return on capital is 4.94 percent. Company is operating at gross margin of around 23 percent with EBITDA margin of around 5 percent. Current ratio of HTC 1.1x and quick ratio is 0.8x. Total debt/equity ratio of HTC is around 12x and total liability/assets ratio is 61.4x. HTC registered negative revenue growth of 39 percent and negative gross profit of 47 percent (Bloomberg Businessweek).
This analysis shows that company is not occurring losses but unable to sustain its growth. There could various factors behind declining growth of HTC such as increasing competition by Google, Apple, Samsung and RIM, new entry of domestic players in different foreigners markets, poor marketing strategy, and economic slowdown. HTC was also unable to reduce its cost and expenditure which ultimately impacts business profit. HTC stock is showing poor performance and continuously declining. Company is unable build brand awareness in US market. However company is able to increase its market share in Asian markets such as Indonesia, China, Korea, Japan, and Hong-Kong. HTC is required to emphasize on gaining economy of scale, adopting advance technology at various levels of supply chain, reduction in cost associated with inventory management and building brand awareness. Company is lagging far behind its competitors such as Apple, RIM, and Samsung when it comes to brand awareness. Company should divert its attention o Asian markets where the brand seems gaining popularity.
After conducting above analysis it can be said that HTC is losing its ground from the market and future of company is on stake. Company revenue is decreasing significantly along with profit. HTC is not able to sustain its market share in different markets however company is gaining popularity in Asian markets. It is essential that HTC develop strong marketing strategy, adopt new processes and technology, and reduce cost at various levels by replacing low performing processes and eliminating idle time. Brand awareness is one of the major area need to be handle by HTC effectively in order to maintain its customer base and market share.
Works Cited
"2013 Index of Economic Freedom." 2013. heritage. 20 October 2013 <http://www.heritage.org/index/country/taiwan>.
"Bloomberg Businessweek." 30 June 2013. investing.businessweek. 20 October 2013 <http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=2498:TT>.
"Bloomberg Businessweek." 2013. investing.businessweek. 20 October 2013 <http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=2498:TT>.
"htc." 2013. htc. 20 October 2013 <http://www.htc.com/in/about/>.
"HTC Investors." 30 June 2013. investors.htc. 20 October 2013 <http://investors.htc.com/phoenix.zhtml?c=148697&p=irol-fundSnapshot>.
Lai, A. W. "Consumer Values, Product Benefits and Customer Value: A Consumption Behavior Approach." Advances in Consumer Research (1995): 381-388.
MarketLine. "HTC Corporation – SWOT, Strategy and Corporate Finance Report." Company Report. Dec, 2012.
P. Kotler & K. Keller. Marketing Management. London: Prentice Hall, 2011.
