HTC has recently announced that they are going to lay off another 1,500 employees from their Taiwanese manufacturing division. Why are they doing this? The answer is a bit shocking, but it’s to restore profitability. Is this really the way to do it though? I guess when it comes to the bottom line, if a company isn’t doing well, the only way to bring it back into the black is to cut operating costs. In a statement, HTC said that it will reorganize itself again, in order to take advantage of efficiency savings as well as to help cushion its bottom line. Which, at the moment is virtually non-existent, so that is kind of a joke – right? That said, they are going to attempt to help their employees find other jobs, and work with the Bureau of Labor on this initiative.
Is that enough, though? When it comes to finding efficiencies, is this the way to do it? Or should HTC consider other measures? Sure, reorganizing a company will certainly cut operating costs rather quickly, but it then means that those who still work there have to do more for the same pay. Or maybe less pay in some cases. This will put more stress on employees, which will inevitably lead to burn out. Which will lead to high turn-over, and ultimately contribute to low morale. But if it helps the bottom line then I guess it’s ok?
Reorganizations are fairly common with HTC, and they are still working through some challenges that have come up from their previous re-org earlier this year. Shortly after the president of HTC’s mobile division resigned, the company decided to combine its VR and mobile divisions into one. That said, it hasn’t helped the recent handsets, like the U12+. It debuted to some mediocre reviews, and there were a lot of complaints about its usability. In addition, the Vive Pro had some pretty good reviews, but the high prices and lack of accessories made it a bit of a flop.
The outlook for HTC’s mobile unit hasn’t looked great for several years. Last year it sold its Pixel team to Google for $1.1 billion, and that didn’t do much for their bottom line. It did further reduce the number of employees, and yes – it gave them some much-needed cash. But it also screamed that HTC had just handed over a big (and incredible) part of their business. Not only that, but Google is one of their biggest rival manufacturers. The reason that this was a no-brainer for HTC is that prior to that their share prices fell below its valuation. Essentially telling the world that their company was worthless.
Which, makes you wonder if this is going to do anything for their bottom line? Since 2014, their annual profits have been dropping rapidly. It’s hard to believe that HTC can bounce back from this. I certainly don’t think that they’re approaching it from the right angle, but I am not their CEO. Perhaps it’s a desperate time, and you all know what that means – desperate measures.