HTC stays profitable, plans to slowly diversify product lines

Call it three for three: HTC followed its second consecutive quarter of profit with another one in the period ending December 31. The company announced net profit after taxes of NT $500 million (US $15.86M) on NT $47.9B in revenues for its fiscal fourth quarter. The company says year-over-year revenue rose by 12 percent.

Looking ahead, HTC expects a slight dip in revenues and gross profit margin, so it’s not out of the woods yet after; prior to the previous nine months, the company had seen its meteoric rise turn into a falling star as competition from Samsung, [company]Apple[/company] and others ate into its smartphone sales.

How might HTC continue to turn things around back to when it was the smartphone sales leader in the U.S.?¬†Here’s one big clue, from the earnings press release, with emphasis added by me:

HTC embarked on a diversification strategy in Q4 to extend the mobile lifestyle and broaden consumer reach. HTC entered into the first of several strategic partnerships aimed at facilitating new product categories; the collaboration with Under Armour, announced at the CES show in Las Vegas in early January, will bring a line of connected health and fitness-related devices to market that appeal to athletes of all levels. The HTC RE camera was launched in Q4 amid considerable acclaim from lifestyle and consumer media; this remarkable little point of view camera redefines lifestyle photography, enabling people to step out from behind the viewfinder and capture the moment.

The commentary reinforces much of the story I heard from HTC executives when I met with them at last month’s Consumer Electronics Show. They focused on what I’d call controlled product diversification.

HTC’s deal with Under Armour deal last month, for example, was the beginning of a move toward HTC getting into the health-tracking space. Rumors of an HTC smartwatch, or perhaps a fitness band, sound accurate to me. HTC could also take what it learned from the RE camera and create more unique devices for capturing images and video. And I wouldn’t be at all surprised to see some product or products revolving around smart homes or the internet of things.

HTC isn’t in the¬†position that Samsung is in: It’s not big enough and doesn’t have the cash and diversified business lines to try out dozens of new, wide-ranging products each year. But HTC can take a measured approach toward diversifying its line, particularly if its next flagship phone — expected to debut on March 1 — sells well enough to do two things: Keep revenues flowing and reinforce he HTC name so that the company can slowly expand in new areas.