HTC shares steady after clarification of remarks
CNATAIPEI, Taiwan -- Shares of Taiwan-based smartphone vendor HTC Corp. stabilized Tuesday after plunging a day earlier following the company's clarification of a remark made by Chairwoman Cher Wang, dealers said.
October 9, 2013, 12:07 am TWN
In an interview with Bloomberg published Monday, Wang said the fourth quarter would pose the “biggest challenge” to the smartphone supplier.
The comment was interpreted by investors as a sign that HTC would encounter financial difficulties in the October-December period after reporting a net loss in the third quarter, and they proceeded to dump the stock.
But HTC said in a statement released late Monday that the “challenge” Wang spoke of referred to the uphill battle of finding a good marketing strategy to help the company compete rather than financial problems, as the market had thought.
Shares of HTC closed up 0.40 percent at NT$126.50 (US$4.30) on Tuesday, with 11.13 million shares changing hands, after the stock fell 7 percent, the maximum daily decline, a session earlier in the wake of the Wang interview.
The weighted index on the Taiwan Stock Exchange ended up 0.50 percent at 8,375.65.
Market analysts said that after a recent sell-off because of concerns over the smartphone vendor's sales prospects, HTC shares could see some short-term technical support at around NT$122.00.
In clarifying Wang's remarks in the interview, HTC also said the company has cutting edge technology and the best products in the global smartphone market, which it described as its most precious assets.
HTC added that it was determined to grab a higher market share by using more creative and effective marketing measures to attract consumers.
HTC's Global Market Share Falling
According to Bloomberg, HTC's global market share fell to 2.8 percent in the second quarter from 5.8 percent during the same period last year.
Amid fierce competition, HTC reported a quarterly net loss for the third quarter of NT$2.97 billion, or NT$3.58 per share. It was the first quarterly loss posted by the smartphone vendor since it went public in March 2002.
HTC reported consolidated sales of NT$47 billion for third quarter, short of its estimated sales range of NT$50 billion-NT$60 billion, and had an operating loss of NT$3.5 billion.
In a research report, Credit Suisse said the stiff competition faced by HTC is expected to continue in the fourth quarter because of the release of new models by major rivals, such as Apple Inc. and Samsung Electronics Co. The brokerage would not rule out the possibility that HTC will post another loss in the quarter but said the sale of its remaining stake in U.S.-based headphone maker Beats Electronics LLC could help the smartphone vendor's bottom line to some extent.
In late September, HTC announced it will sell its remaining 24.84 percent stake in Beats, and the transaction, scheduled to be completed in the fourth quarter, should generate about NT$2.52 billion in pretax profit.
Credit Suisse said HTC could also benefit from falling operating costs to report a smaller loss in the fourth quarter than in the third quarter.
Capital Investment Management Corp. said that in addition to stiff competition in the high-end smartphone market, HTC has been held back by its failure to make a breakthrough in the low- and mid-range segments that could improve its shipment numbers.