After seeing its profits steadily fall over the past years, HTC has predicted it will post an operating loss next quarter, its first since going public in 2002. The Taiwanese manufacturer expects its operating margin to fall between 0 and negative eight percent in Q3, down from Q2's 1.5 percent. Gross margin is expected to be in the range of 18 to 21 percent, down from the previous quarter's 23 percent. Revenues are expected to slip to between NT$50 billion and NT$60 billion (roughly $1.67 billion - $2.01 billion), down on last year and way down on the analyst consensus of around NT$75 billion ($2.51 billion). Despite the gloomy outlook, the company says that its flagship HTC One has performed well, outperforming last year's models, and notes that the phone has had a positive affect on the way its brand is perceived.

HTC says it's taking action to rectify the situation, Q4 will see improvement

HTC blames a "lack of economy of scale" for its current woes, while also pointing to uncompetitive products in the mid-range, and the cost of clearing "aging products in the channel." It notes that it has "a range of innovative and competitive mid-tier products" coming in the next few months — of which, we imagine, the HTC One mini is the first. The company says "actions have been taken" to combat all of its problems, and it expects to see improvement in Q4, although it hasn't given figures on what exactly "improvement" will look like.