As HTC Cuts 2,000 Jobs Following Biggest Quarterly Loss, Is this the new Blackberry?

by Benson Agoha| Technology

Declining sales is forcing Taiwanese Smart Phone manufacturer, HTC to downsize in order to stem rising costs that are not being marched by sales. As much as 2000 jobs are on the line, representing 15% of its workforce.

* The HTC One

The move comes after the company announced a disappointing quarterly result - the biggest it has witnessed in its history.

HTC, one of the smart phone manufacturers that revolutionized the mobile phone industry with google-backed android technology is struggling due to crippling competition from strong challengers like Chinese own Huawei and Apple's iPhone range, which continues to be popular among young, mature and corporate executives.

---------------------------------------------------------------------------

---------------------------------------------------------------------------

The revelation of the plan to reduce staff came less than a week after HTC said it had swung to a deep loss of Tw$8.0 billion (some 8 billion Taiwanese Dollars) or (£159 million) for the second quarter, compared with $2.26billion (£1.45 billion) for the same period last year.

That saw HTC’s share price attracting the bearish rating as it closed on the Nasdaq , having sank to its lowest in more than a decade.

* The Blackberry Passport

On Thursday stocks fell further, closing down 7.82% at Tw$50.7 ($1.57) or (£1) and then improving marginally on Friday, closing at Tw$53.57 ($1.65) or (£1.06).

Once the star of the intensely competitive smartphone sector, HTC has seen its fortunes collapse as Samsung, Apple and strong Chinese brands like Lenovo and Huawei have surged ahead.

With this kind of news, one wonders if HTC is about to become the new Blackberry, where the launching new models that introduced innovative ranges to its product portfolio (like the Leap and Passport), has not wooed back customers. Blackberry is reportedly considering halting to manufacturing of smart phones altogether.

But according to a report by the Industry Week, the jobs cuts at HTC are part of a “business realignment” to spur growth.

The company said in a statement that it was aiming for “significant profitable growth with a leaner and more agile operating model. … This realignment will also involve a streamlining of operations to result in an expected reduction in operating expenditure of 35%; this includes an expected 15% in headcount.”

* Industry Week contributed to this report.