Second quarter results season is upon us, and a bunch of smartphone manufactures are finding themselves in the dog house with their investors.
First up is HTC. Although it had already warned investors that it wasn’t going to turn a profit this quarter, the company officially released its preliminary report today and the results were not good. In the unaudited report, HTC says it expects an operating loss of about $211 million on revenue of $1.34 billion (all numbers USD equivalents).
In the same report, HTC says it will get back to profitability by focusing on mid-range phones and by continuing to invest in new verticals like virtual reality. However, as TechCrunch notes, the former not be the best strategy for the company. With Samsung dominating the high-end and Chinese manufacturers like Xiaomi creating compelling smartphones for $200 and less, there might not be a place for HTC in the current Android marketplace to eke out a profit.
Speaking of Samsung, it too is dealing with an unhappy set of investors.
In June, Thomson Reuters surveyed 39 business analysts, asking them to predict how profitable the company would be this quarter. The consensus then was that Samsung would make about $7.9 billion dollars. In the past 30 days, 20 of those analysts have cut their expectations.
Despite excellent sales of the Galaxy S6 and S6 edge (the S6 family is currently the company’s best selling series of smartphones to date), investors and analysts say they’re disappointed by the Samsung’s performance. According to the analysts Thomson Reuters interviewed, the South Korean company could have made more money had it properly prepared for S6 edge demand. Although Samsung says it has the capacity to meet the demand now, it might have missed it chance to capitalize with competitors like Apple preparing to release their own offerings.
The company still had a great quarter and most importantly is improving in mindshare after a forgettable 2014, but investors always want more from their portfolio companies – that’s just the nature of capitalism.
In any case, Samsung will release its preliminary results tomorrow, at which point we’ll have a better sense of its financials.