SEOUL: HTC plunged by the daily limit after its forecast for a quarterly loss five times greater than estimates spurred analysts to slash their valuations of the stock.
Shares dropped 10 per cent to NT$63 ($2.70) in Taipei on Friday, heading for their lowest price in more than a decade. The smartphone maker’s third-quarter loss will be NT$5.51 to NT$5.85 per share, compared with expectations for a loss of NT$1.17 per share. Its sales forecast given Thursday is as much as 48 per cent below estimates.
HTC plans to cut staff, reduce spending and slim down its product catalogue as cheaper phones from Huawei Technologies Co. and competition from Samsung Electronics Co. further erode its market share. Founder, chairwoman and chief executive officer Cher Wang has stated she won’t consider mergers, even as the company fell off the global list of top 10 phone makers.
“HTC’s multiple model strategy in the past year did not work as planned,” JPMorgan Chase & Co. analyst Narci Chang wrote in a note. “HTC’s current business models need a significant makeover.”
Chang cut his target on the stock by 55 per cent to NT$45, joining analysts from Credit Suisse Group AG, UBS AG and Daiwa Securities Group in reducing price estimates. None of the 29 analysts who actively cover HTC have a buy rating on the stock.
Product strategy
Sales this quarter will be NT$19 billion ($600 million) to NT$22 billion, the company said, compared with estimates for NT$36.8 billion. Revenue at the bottom end of that range would be the lowest in a decade when figures were reported at the parent level.
HTC will change its product strategy to produce fewer models over longer time intervals while focusing on a greater share of industry profits instead of shipments, chief financial officer Chang Chialin said Thursday. Cost reductions will start this quarter, with the result of those cuts being shown in the first quarter, he said.
There’ll be no one-time non-operating items this period, he said.
Thursday’s forecast comes after the Taoyuan, Taiwan-based company in June cut its sales guidance for that quarter by 35 per cent and wrote off NT$2.9 billion in idled assets, citing slowing demand for high-end smartphones and weaker China sales.
