HTC’s latest earnings show why it can hardly compete anymore

Stop me if you’ve heard this before: HTC’s latest quarterly earnings look pretty rough.

The troubled Taiwanese phone maker’s Q1 2017 results show declines across the board. The one bright spot is that HTCmanaged to reduce losses, though this was achieved through drastic belt-tightening rather than higher sales.

HTC recorded revenues of TWD 14.5 billion ($480 million) in Q1 2017. That’s 35 percent lower than Q4 2016, though some of the decline could be attributed to seasonality. The year-on-year decline was 2 percent. While revenue fell off a cliff compared to the previous quarter, HTCbooked a smaller operating loss in Q1 – TWD 2.4 billion ($79.3 million), compared to TWD 3.6 billion ($119 million) in Q4 2016.

The earnings breakdown shows just what kind of sacrifices HTChad to make in order to minimize losses. Compared to the same time last year, the company cut R&D spending by 14 percent. The cuts in sales and marketing spending were even harsher at 35 percent. HTCalso tightened the belt in general administration spending, to the tune of 25 percent year-on-year.

It’s not clear for how long can HTCsoldier through, but the spending cuts are one of the reasons why the industry leader of 2011 is just an also-ran in 2017. With competition in the smartphone market at an all-time high, HTCis drastically cutting R&D and marketing spending. In a vicious circle, this will likely lead to even lower revenues in the next quarters.

HTC’s next chance to break out from the vicious circle is the launch of the U 11. The bad news is the most interesting feature of the new flagship seems rather gimmicky: you’ll be able to control it through squeezes. Read more about it here and let us know what you think.