HTC net profit worse than expected in fourth quarter despite cost cutting

Smartphone maker reports net profit of T$0.3bn (£6.1m), despite outsourcing production and selling stake in Beats Electronics

HTC's headquarters in Taipei, Taiwan. Photograph: Str/EPA

Taiwanese smartphone maker HTC has reported a worse-than-expected net fourth-quarter profit despite aggressive cost cutting and more than £50m proceeds from selling its stake in the company behind Beats by Dr Dre headphones.

HTC reported net profit of T$0.3bn (£6.1m), compared to a net loss of T$2.97bn (£60m) in the previous quarter and profit of T$1.01bn (£20.7m) in the same quarter of 2012.

The figure lags expected net profit of T$721.71m (£14.7m), according to Thomson Reuters.

The number highlights how quickly problems have piled up at a company that just over two years ago supplied one in every 10 smartphones sold around the world.

The company, which has lost nearly three-quarters of its market value in the last two years, is now worth about £2.4bn, dwarfed by rivals Appleand Samsung Electronics.

New management installed in the last quarter to tackle that slide must persuade customers the brand can still stand for stylish, feature-loaded phones, while keeping a lid on development costs.

Despite its latest flagship product, the HTC One, winning rave reviews, the company's global share of the smartphone market has declined to 2.2% in the third quarter of 2013 from a peak of 10.3% in the third quarter of 2011, data from research firm Gartner shows.

While the company's recent "Here's to Change" campaign has seen an advertising revamp featuring Iron Man star Robert Downey Jr, analysts remain skeptical about the firm's ability to differentiate its brand image.

The company has embarked on a cost-cutting campaign that includes buying its chips more cheaply and outsourcing production. It also sold its stake in headphone brand Beats Electronics, booking a one-time pre-tax profit of T$2.5bn (£51.8m), which would be recorded in the fourth quarter.