HTC shares fall to new low de­spite award for VR de­vice

The China Post - - BUSINESS -

Shares of Tai­wan-based smart­phone ven­dor HTC Corp. (

) came un­der pres­sure to fall to a new low Fri­day as there have been no signs that the com­pany will make a turn­around any time soon af­ter its large losses in the sec­ond quar­ter and a gloomy out­look for the third quar­ter, deal­ers said.

Amid con­cerns over the ven­dor’s bot­tom line, in­vestors tended to ig­nore an award for “Best Hard­ware” won by the HTC Vive, the vir­tual re­al­ity (VR) head­set, this week at Gamescom, a trade fair for video games held an­nu­ally in Ger­many, they said.

While HTC is gear­ing up to grasp a share in the VR head­set busi­ness by launch­ing the HTC Vive, it re­mains to be seen whether its ef­forts in VR de­vice de­vel­op­ment will strengthen the smart­phone ven­dor’s prof­itabil­ity, they added. The HTC Vive was de­vel­oped with U.S. video game sup­plier Valve.

Shares of HTC fell 10 per­cent, the max­i­mum daily de­cline, to NT$44.55 (US$1.36) with 28.62 mil­lion shares chang­ing hands on the Tai­wan Stock Ex­change, where the weighted in­dex ended down 3.02 per­cent at 7,786.92.

The stock faced tremen­dous down­ward pres­sure soon af­ter the lo­cal main board opened as the broader mar­ket was hit by tur­moil in the global fi­nan­cial mar­kets amid con­cerns over de­mand at a time of a slower-thanex­pected pace in the world’s eco­nomic re­cov­ery, deal­ers said.

Pos­si­ble Fur­ther Losses

Selling in HTC shares es­ca­lated to push down the stock by 10 per­cent at the end of the ses­sion, as in­vestors’ con­fi­dence in the smart­phone ven­dor’s oper­a­tions has been eroded by its latest fi­nan­cial re­sults, they said. Af­ter the close, there have been or­ders placed by in­vestors to sell an ad­di­tional 617,000 HTC shares, in­di­cat­ing fur­ther losses are pos­si­ble.

In the sec­ond quar­ter, HTC posted a loss per share of NT$9.7 due to a mas­sive one-time charge for idled as­sets and pre­paid ex­penses, while slow­ing global de­mand for smart­phones was also cited as a fac­tor in the sec­ond quar­ter losses.

HTC has an­tic­i­pated that it will in­cur an ad­di­tional NT$5.85 to NT$5.51 in net loss per share for the third quar­ter amid fiercer than ex­pected com­pe­ti­tion not only from Ap­ple Inc. and Sam­sung Elec­tron­ics Co. in high-end mod­els but also from Chi­nese ri­vals, such as Xiaomi, in bud­get mod­els.

HTC Vive

In terms of the HTC Vive, in­vestors re­mained cau­tious about HTC’s strat­egy to en­ter the VR turf as the mar­ket has ex­pected the new busi­ness will yield only lim­ited ben­e­fits to the smart­phone ven­dor in the near term.

To boost its vis­i­bil­ity in the VR de­vice busi­ness, HTC has spent more than NT$300 mil­lion to in­vest in WEVR, a VR con­tent devel­oper in the United States, while hav­ing kicked off a world tour to mar­ket the HTC Vive.

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