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March 31, 2017

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Morgan Stanley still cautious on HTC over new Samsung phone

TAIPEI -- U.S. brokerage Morgan Stanley has maintained a cautious view on Taiwan's HTC Corp. following the launch of Samsung Electronics Co.'s flagship Galaxy SIII smartphone.

In a recent research note, Morgan Stanley kept an "underweight" rating on HTC and expected shipments of the Taiwanese firm to grow 55 percent from the first quarter to reach 10 million units in the April-June period, citing strong sell-in strength at distributors on the HTC One family.

"While we think the HTC One X in some cases outshines the Samsung Galaxy SIII, limited hardware differentiation suggests a shorter technology gap between the two names," Morgan Stanley analyst Jasmine Lu wrote in the note.

However, Lu said it is difficult for HTC to compete with Samsung in terms of marketing dollar, distribution and operator coverage, especially in emerging markets like Europe, the Middle East and Africa. "Nonetheless, its (Samsung's) aggressive marketing campaign, software/user interface additions that enhance the user experience, and wider distribution should solidify its position in the high-end smartphone segment," she added.

Samsung showcased its latest Galaxy SIII smartphone Friday in London. It featured the Android 4.0 operating system, a 4.8-inch display, an 8-megapixel camera and a quad-core processor.

The South Korean electronics giant said the new phone will go on sale May 29 in 145 countries through 296 operators, starting in Europe with 3G versions. A long-term evolution version for North America, Japan and South Korea is expected in summer.

Robert Cheng, head of Taiwan research at Bank of America Merrill Lynch, said that some investors are holding high expectations toward Samsung's new phone launch.

However, it's a "relief" to HTC that the specifications on Galaxy SIII are similar to those the HTC One series is offering, he added.

Nonetheless, Merrill Lynch still holds a "neutral" view toward HTC, given intensified competition and the new iPhone launch in the second half of this year, which could affect HTC the most compared with other brands' products, Cheng said.

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