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Its cash flow under pressure, HTC said to slow production

updated 09:54 am EDT, Wed October 23, 2013

HTC short on cash, consolidating production operations

Taiwanese smartphone manufacturer HTC has denied reports that cash flow problems have led it to halt production at at at least one of its four main manufacturing lines. Early on Wednesday, Reuters reported that HTC had stopped production at one of its factories about an hour from Taipei, with sources saying that the firm "has to do something soon" in order to improve its cash position. HTC representatives, though, deny any cessation of production, saying instead that what Reuters saw was the product of normal company operations.

"Like any manufacturer," said HTC Chief Marketing Officer Ben Ho, "we do volume planning to optimize our lines, our manufacturing and production facilities. Whether we are operating those facilities depends on market demand and our own expectations. When you have less demand you work with less facilities to optimize your costs. When you have demand, or bigger growth, you definitely have to activate all these facilities."

Reuters' report goes on to claim that HTC has consolidated production operations from two lines into one, reducing its potential capacity by roughly one million phones per month. The manufacturer is also said to have considered selling some out-of-use production lines.

Despite critical acclaim for its devices, most recently this year for the flagship HTC One, the Taiwanese manufacturer has continually lost market share to South Korea's Samsung. This last quarter saw HTC posting a net loss of $101 million on $1.6 billion in revenue.

HTC executives have claimed that high-end devices such as the One have been selling well, but that the company's losses have stemmed from stiffer competition in the mid-range segment. Complicating the matter, HTC has seen considerable shakeups in its executive suites, losing a number of executives to morale problems. In June of this year, the company cut executive pay in half due to repeated poor financial results.

Most recently, CEO Peter Chou and chairwoman Cher Wang confirmed that Wang will take over sales, marketing, and supplier relationships for the firm. Wang, who had been handling those duties, said that the workload had made him "too busy," resulting in him being unable to give issues the proper focus and attention.

HTC's executives remain confident about the company's future, saying that it will see "a good result next year." Despite the recent loss, HTC reportedly plans to release a "nice and disruptive" tablet in the near future. There are also rumors that it is working on a smartwatch device.

by MacNN Staff




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