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.
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.
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.