HTC needs time to revamp itself: foreign brokerage
CNATAIPEI--Nomura Securities has praised HTC Corp.'s move to make some management duty changes, but said the Taiwanese smartphone vendor still needs some time before these efforts pay off.
October 27, 2013, 12:01 am TWN
In addition to the management duty shift, news media reported HTC could outsource its production but concentrate itself on product design, while the smartphone vendor could use Taiwan-based MediaTek Inc.'s chips to raise competitiveness.
In a recent research note, Nomura Securities said it was glad to see HTC taking action to take on the challenges it faces at a time when competition is escalating and its market share is shrinking.
However, it remains to be seen whether HTC's efforts will help the smartphone vendor make a turnaround, Nomura Securities said, adding that it remains a challenge for the company to become profitable in the fourth quarter of this year and in the first quarter of next year.
HTC posted a net loss of NT$2.97 billion (US$101 million), or NT$3.58 per share, for the third quarter. It was the first time for the smartphone vendor to report a quarterly net loss since it launched its listing on the main board in March 2002.
Nomura Securities said it has left unchanged an “underweight” recommendation and a target price of NT$103.00 on HTC shares.
On Friday, shares of HTC, bucking the downturn on the broader market, attracted bargain hunting on a relatively low valuation, to close up 3.09 percent at NT$150.00, the highest level since Aug. 30, when the stock ended at NT$156.50.
Market analysts said investors have been impressed by a move for HTC CEO Peter Chou to transfer some of his duties, such as marketing and supplier relations, to Chairwoman Cher Wang, while he will focus on product innovation.
Nomura Securities said it hopes that HTC will make more efforts in managing its supply chain so that it can avoid a supply shortage which had hurt the smartphone vendor's shipments in the past.
The brokerage said it also hopes that through the management duty shift, HTC will be able to better communicate with its customers.
The market has speculated that HTC will likely outsource its production to contract makers, like Hon Hai Precision Industry Co. and Wistron Corp. Nomura Securities said if the speculation turns out to be true, HTC will see downward pressure on its profit margin reduced.
The brokerage said if HTC uses MediaTek's chips, which are competitive in pricing, the smartphone vendor will likely grasp a higher share in the low cost smartphone market.