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HTC, Samsung disappoint as smartphone sales slow

Underwhelming sales of the HTC One and the Samsung Galaxy S4 led the two phone-making technology giants to miss analysts' quarterly profit estimates, according to preliminary earnings reports released Friday.

In the quarter ended June 30, HTC Corp. posted a net profit of $42 million, down 83% from a year ago.

Samsung Electronics Co. Ltd. said its operating profit was in the $8.3-billion range, up 50%, but it was still considered a disappointment in the eyes of analysts. Both HTC and Samsung spent heavily on marketing in the last quarter as they launched their new phones. Those costs cut into profits.

PHOTOS: Top smartphones of 2013

Now, the spotlight turns to a series of follow-up versions of the high-end Android smartphones and whether they'll sell well enough for the companies to sustain sales growth in the hot summer-buying season.

The HTC One Mini should be released by August. It's expected to feature a 4.3-inch screen and come with slightly cheaper components than the 4.7-inch HTC One. By the winter, rumors suggest HTC should unveil an HTC One Max smartphone-tablet combination device. Among its standout features will be a battery with a long charge.

HTC also recently released a version of the One that comes with an unedited version of Android. Typically, smartphone makers tweak the default Android operating system to include their own apps and branding.

Samsung has a mini version and an untouched version of the Galaxy S4, too. There's even the hardy Galaxy S4 Active and the camera-centric Galaxy S4 Zoom.

The smartphone business generates 70% of Samsung's profits, according to Reuters. And weakening smartphone sales growth has caused Samsung shares to tumble recently. That's problematic for a company looking to inject more capital into research and development. Reports this week say Samsung plans to spend $4.5 billion on five new research centers in South Korea during the next three years.

Meanwhile, HTC endured turmoil in its executive ranks in the last quarter after showing record-low earnings in the first quarter. Several high-ranking executives left the company, including its CEO for Asia and chief product officer.


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