HTC shares ex­tend heavy losses, fall be­low NT$80

The China Post - - TAIWAN BUSINESS -

Shares of Tai­wan-based smart­phone ven­dor HTC Corp. (???) took a beat­ing to fall be­low NT$80 (US$2.58) Tues­day morn­ing, ex­tend­ing losses from a ses­sion ear­lier, af­ter the com­pany warned over the week­end that it could in­cur an al­most NT$10 loss per share for the sec­ond quar­ter of this year, deal­ers said.

The cur­rent sell­ing re­flected in­vestors’ lin­ger­ing wor­ries over HTC’s earn­ings out­look at a time when he global smart­phone mar­ket’s growth has showed signs of mod­er­at­ing and es­ca­lat­ing com­pe­ti­tion has placed grave pres­sure on the Tai­wanese firm’s ship­ments, they said.

As of 10:57 a.m., shares of HTC had lost 10 per­cent, the max­i­mum daily decline, to NT$75.30 with 7.39 mil­lion shares chang­ing hands. The weighted in­dex on the Tai­wan Stock Ex­change was down 0.85 per­cent at 9,288.36 points.

The stock fell 10 per­cent soon af­ter the lo­cal bourse opened Tues­day af­ter a 10 per­cent fall a ses­sion ear­lier as in­vestors re­mained shocked by the com­pany’s warn­ing of a mas­sive net loss for the April-June pe­riod, Taishin Se­cu­ri­ties In­vest­ment Ad­vi­sory an­a­lyst Tony Huang said.

“To my knowl­edge, there have been or­ders placed by in­vestors to sell about 18 mil­lion HTC shares for now,” Huang said. “The earn­ings warn­ing still served as the cul­prit of the sell­ing and I think the down­turn will con­tinue.”

Be­fore the earn­ings warn­ing, Huang said that many in­vestors had high hopes that HTC would re­main prof­itable in 2015 af­ter it turned a profit in 2014, when its earn­ings per share stood at NT$ 1.80 com­pared with NT$1.60 in loss per share recorded a year ear­lier.

Not Likely to Profit This Year: An­a­lyst

“But, it turned out that the com­pany will in­cur a net loss of al­most NT$ 10 in the sec­ond quar­ter. So it is un­likely for the com­pany to re­port a net profit this year, which dis­ap­pointed many in­vestors and prompted them to cut their hold­ings in the stocks start­ing from Mon­day,” Huang said.

Ac­cord­ing to HTC’s re­vised earn­ings fore­cast, it could post a net loss of NT$9.70-NT$9.94 per share for the April to June pe­riod. HTC cited a one­time im­pair­ment of NT$2.9 bil­lion for idle as­sets and pre­paid ex­penses as part of the causes for the large sec­ond quar­ter losses. The com­pany also at­trib­uted the sec­ond quar­ter losses to lower-than-ex­pected global de­mand for high-end An­droid de­vices and a weaker China mar­ket.

“Un­less HTC finds mean­ing­ful al­ter­na­tive sales sources be­yond smartphones, it is hard to re­verse the cur­rent dol­drums,” Huang said.

Wear­able De­vice and Vir­tual Re­al­ity

Mar­kets

While HTC said that it has been gear­ing up to en­ter the wear­able de­vice and vir­tual re­al­ity mar­kets, “It needs time to have a suc­cess­ful har­vest. So, in­vestors should keep their hands off HTC shares for now.”

Af­ter the re­vised sec­ond quar­ter guid­ance was re­leased, sev­eral for­eign bro­ker­ages have cut their tar­get prices on HTC shares. A Euro­pean bro­ker­age, which is­sued a sell rat­ing on HTC shares, has even cut its tar­get price on the stock from NT$ 100 to NT$ 52, the low­est level among the for­eign bro­ker­ages which track HTC shares.

De­spite the cuts in tar­get prices of the stock, for­eign in­sti­tu­tional in­vestors bought a net 1.47 mil­lion HTC shares on the main board Mon­day for short cov­er­ing.

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