HTC shares be­low NT$50 amid out­look con­cerns

The China Post - - TAIWAN BUSINESS -

Shares of Tai­wan-based smart­phone ven­dor HTC Corp. fell be­low the NT$50 mark Tues­day morn­ing as in­vestors re­mained wary of the com­pany’s earn­ings out­look be­cause of its gloomy third-quar­ter profit guid­ance, deal­ers said.

HTC’s an­nounce­ment that it will cut its global work­force by 15 per­cent to rein in op­er­at­ing costs failed to ease con­cerns about the com­pany’s bot­tom line, and in­vestors con­tin­ued to pun­ish the stock and push it to a new low, deal­ers said.

As of 11:13 a.m., shares of HTC had fallen 2.67 per­cent to NT$49.25 af­ter fall­ing 2.88 per­cent Mon­day, with 16.04 mil­lion shares chang­ing hands. The weighted in­dex on the Tai­wan Stock Ex­change was down 0.34 per­cent at 8,185.80.

The stock opened higher and rose 1.78 per­cent to an early high on a tech­ni­cal re­bound from Mon­day’s slump, but selling im­me­di­ately fol­lowed, send­ing the share price into neg­a­tive ter­ri­tory, deal­ers said.

“To­day’s ear­lier re­bound staged by HTC shares was noth­ing but a tech­ni­cal re­sponse,” Ta Ching Se­cu­ri­ties an­a­lyst Andy Hsu said.

“As mar­ket sen­ti­ment to­ward HTC’s out­look re­mains very week, the stock is sim­ply on a down­trend and fur­ther losses are pos­si­ble.”

HTC’s share price has fallen more than 51 per­cent in the past three months.

“It is hard to gauge when HTC shares will find any tech­ni­cal sup­port un­der such dif­fi­cult cir­cum­stances. Any tech­ni­cal re­bound re­flects in­vestors’ trad­ing strate­gies and will pave the path for a fur­ther down­turn,” Hsu said.

Sev­eral for­eign bro­ker­ages have cut their tar­get prices on HTC prices. A U.S.-based bro­ker­age cut its tar­get price on HTC shares from NT$100 to NT$45, the low­est level among the for­eign in­sti­tu­tional in­vestors track­ing the stock.

Hsu said that af­ter HTC gave its third quar­ter guid­ance ear­lier this month, say­ing that it ex­pected to post an ad­di­tional loss per share of NT$5.51-NT$5.85 in the quar­ter, af­ter record­ing a loss per share of NT$9.7 in the sec­ond quar­ter, in­vestor con­fi­dence in the stock has crum­bled.

The mar­ket is an­tic­i­pat­ing that HTC will in­cur another NT$1-2 in net loss per share in the fourth quar­ter and suf­fer a loss per share of more than NT$15 for 2015 as a whole.

To tackle

its cur­rent fi­nan­cial woes, HTC an­nounced last week that it will cut its global work­force by 15 per­cent, or 2,250 em­ploy­ees, in a bid to re­duce its op­er­at­ing costs by 35 per­cent.

“The down­siz­ing is likely to stem some losses in the short term. But HTC needs a long-term strat­egy to tackle the slow­ing global smart­phone mar­ket and boost its global com­pet­i­tive­ness, or its oper­a­tions could con­tinue to worsen,” Hsu said.

“To many con­sumers, HTC’s prod­ucts lack in­no­va­tion, mak­ing it hard for the com­pany to fend off fierce com­pe­ti­tion from its ri­vals.”

Ac­cord­ing to a re­cent re­search re­port re­leased by Mor­gan Stan­ley, the bro­ker­age has cut its forecast for global smart­phone ship­ments by 3.1 per­cent for 2015 to 1.46 bil­lion units and by 6.3 per­cent for 2016 to 1.61 bil­lion units.

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