HTC's struggle over patent dispute forecast to continue for next 2 years
January 7, 2014, 12:14 am TWN
TAIPEI--Taiwan's HTC Corp. will continue to struggle in 2014 and 2015 due to its ongoing patent dispute with Nokia Oyj and its shrinking shipments, according to CLSA Ltd.
CK Cheng, a CLSA analyst in Taipei, forecast that the smartphone maker will post losses per share of NT$6.6 in 2014 and NT$1.9 in 2015.
At the end of 2013, HTC's quarterly revenue contracted year-on-year for the ninth consecutive quarter, despite the launch of its first phablet phone, the One Max, he noted.
HTC's near-term risks include its recent loss in a recent string of patent lawsuit brought by Nokia in the Netherlands, U.S., U.K. and Germany, while its long-term survivability remains unclear amid a management reshuffle and a lack of strategic partners, Cheng said.
“We are unconvinced about HTC's recent push into China's mid-end smartphone segment, which is the most competitive market in the world,” he wrote in a note to clients dated Jan. 5.
The analyst forecast that HTC's shipments will continue to decline, dropping 17 percent to 17.5 million units this year and 11 percent to 15.6 million units next year, after falling 31 percent in 2012 and 32 percent in 2013.
“Though HTC's outsourcing strategy may help reduce its production costs, sales are unlikely to rebound significantly,” Cheng said.
He gave a “sell” rating on the stock and a price target of NT$91.
In the fourth quarter of 2013, HTC sustained NT$1.56 billion (US$52 million) in operating losses, it reported Sunday.
It was the company's second consecutive quarterly operating loss after being in the black every quarter since it went public in 2002.
Its earnings per share was NT$0.38 in the fourth quarter of last year, not enough to prevent its first ever annual loss of NT$1.6 per share in 2013.
HTC shares had dropped 3.61 percent to NT$133.5 as of 1 p.m. Monday in Taipei trading.