Taiwan's HTC slid into the red for the first time in the third quarter, with sales hit hard by fierce competition in the smartphone market, supply-chain constraints and internal turmoil.
Underscoring a dramatic decline for a company that boasts award-winning smartphones but has failed to develop a durable brand of handsets, it posted an operating loss of NT$3.5 billion (HK$918.6 million) as sales for the quarter tumbled by a third from a year earlier.
The losses were wider than expected and most analysts said the immediate future looked bleak.
"Fundamentally, there are a lot of things that need to be fixed," said Laura Chen at BNP Paribas, adding that the firm needed to work on marketing, supply-chain management and streaming its product line. "No sign of recovery anytime soon."
At a net level, HTC booked a loss of NT$2.97 billion, bigger than an expected loss of NT$1.8 billion, according to Thomson Reuters SmartEstimates. That compares with a net profit of NT$3.9 billion last year.
But after sliding in early trade, HTC shares rebounded to trade up 1.5 per cent yesterday, boosted in part by a note from Fubon Securities citing the possibility of the company teaming with a mainland IT manufacturer either through a potential co-operation deal or merger.
HTC declined to comment on the Fubon report yesterday.
Meanwhile, Microsoft was talking to HTC about adding its Windows operating system to the Taiwanese firm's Android-based smartphones at little or no cost, people with knowledge of the matter said, evidence of the software maker's struggle to gain ground in the mobile market.
Terry Myerson, head of Microsoft's operating systems unit, asked HTC last month to load Windows Phone as a second option on handsets with Google's rival software, said the people, who asked not to be identified. He discussed cutting or eliminating the licence fee to make the idea more attractive, they said.
Its willingness to add Windows as a second operating system underscores the lengths to which Microsoft will go to get manufacturers to carry its software.
HTC, the first company to make both Windows and Android phones, had not unveiled a new Windows-based handset since June, said one person.