HTC shares drop on outlook woes

Although the smartphone supplier said Chairwoman Cher Wang spent more than NT$1.8 billion (US$60 million) to buy 5 million HTC shares in June in an attempt to shore up the stock's price, foreign institutional investors continued to cut their holdings, they said.

Shares of HTC fell 4.32 percent to close at NT$288.00 with about 21 million shares changing hands, while the weighted index on the Taiwan Stock Exchange ended down 0.37 percent at 7,104.27.

It was the first time the stock had closed below NT$300 since Feb. 9, 2010.

“Even with the share buying information, which was disclosed before the market's close, investor confidence in HTC still appeared weak,” MasterLink Securities analyst Tom Tang said.

According to HTC, Wang bought 5 million shares from the open market at about NT$360 per share last month to show that she was keeping her promise to support the company's stock price.

“I think the selling today largely came from foreign institutional investors who have expressed concerns over HTC's earnings outlook as the company encounters strong competition from Apple and Samsung,” Tang said.

According to Tang, foreign institutional investors have been net sellers of about 50 million HTC shares since July 5, when the company went ex-dividend.

“Compared with the 5 million shares bought by Wang, the sell-off by foreign investors has still dictated the movement of the stock,” the analyst said.

Tang said foreign institutional investors held 43.27 percent of HTC's outstanding shares as of the end of Thursday after selling a net 3.87 million HTC shares during the day's session. “Foreign investors still own a big chunk of HTC shares and it's possible that they will continue to unload their holdings amid weak faith in the company,” he said. Mirae Asset Securities of South Korea on Wednesday cut its target price on HTC shares to NT$189.50 from NT$267.10, saying that it was not too late to unload HTC shares.

Before Mirae's move, several foreign brokerages, including Morgan Stanley, Merrill Lynch, Citigroup Global Markets and UBS Securities, had lowered their target prices on HTC shares to a range between NT$230 and NT$290.

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