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HTC's stock price struggles, falling 5.74 percent at close

HTC's stock price yesterday fell 5.74 percent to NT$197 per share at the close of trading, reaching its lowest point for the past seven and a half years.

HTC's share opened high yesterday but by midday the stock price had begun a downward descent. The stock's lowest price yesterday was NT$194.5 per share.

The stock's trading volume remained strong, exceeding 42,543 stock units yesterday. This reflects mixed impressions among investors.

Local reports stated that the company's revenue in October is likely to be less than NT$20 billion — a forecast which surprised the market. HTC's revenue in September was NT$21.13 billion, which was again lower than analysts had expected.

According to analysts, since HTC's new smartphones, announced in October, were all scheduled to be launched this month, investors expected revenue in October to be lower than in September. What surprised investors was that forecasts suggest revenue for October will be less than NT$20 billion.

HTC's highest share price ever was NT$1300 per share, which occurred in April 2011.

Last week, HTC estimated that its revenue in the fourth quarter would reach NT$60 billion — 14.5 percent lower than in the third quarter and the lowest since the second quarter of 2010. Furthermore, in order to adjust its inventory, the company's expected gross profit margin was reduced from 24.8 percent to 23.1 percent. The company's expected operating profit margin in the fourth quarter was reduced to 1 percent.

Mega International Investment Trust Co. (兆豐國際投顧) said in a report that although HTC is going to launch six new cellphones in the fourth quarter, its competitors are also going to release new phones. Moreover, HTC's marketing expenditure in the fourth quarter is expected to be higher than in the third quarter because of the launch of new phones. Mega International expected the after-tax net profit of HTC in the fourth quarter to be NT$660 million, which is 83.5 percent lower than that of the third quarter. HTC's earnings per share are expected to be NT$0.77.

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