HTC shares below NT$50 amid outlook concerns
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.
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.