HTC Shares Face Steepest Plunge Since November 2005

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Taiwanese Phone Maker HTC Corp (TPE:2498), saw the steepest decline in its shares since November 2005. The market value of the company came down by $395 million, according to a report by The Wall Street Journal. HTC witnessed the drop even when it posted a quarter on quarter surge in profit for the second quarter of 2013.HTC Shares Face Steepest Plunge Since November 2005

Analyst Lowering Price Target

On Monday, in mid-day trading, the stock price declined 6.9 percent and was at NT$189 ($6.27), which totals market capitalization of $161.04 billion ($5.34 billion).

According to the WSJ report, Credit Suisse has pulled down their price target on HTC Corp (TPE:2498) from NT$290 to NT$180. Morgan Stanley said in a note that HTC’s “failure to turn the ‘best ever’ HTC One into scale bodes ill for [its] long-term outlook”.

Disappointing Quarter for HTC

HTC Corp (TPE:2498) earned a profit of NT$1.25 billion ($41.63 million) for the second quarter of 2013, which was not in line with the analyst’s expectation. The handset maker could not meet the sales expectations of its best ever device, HTC One, and thus profits were down by a staggering 83 percent in the second quarter compared to the corresponding period of 2012.

COO Mathew Costello joined the series of executives who parted from the company. He was the C-level executive who left the company in May. Earlier it was announced that Lennard Hoornik, CEO of HTC Asia parted from the company to pursue “other interests”. Prior to Hoornik, Jason Gordon Vice President of Global Communications and Chief Product Officer Kouji Kodera left the company.

Long Term Concerns

HTC Corp (TPE:2498) was once the most dominant player in the Android Smartphone sector, but market share declined after mighty rivals like Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and Apple gained popularity. HTC One failed to meet sales expectations and could not add much to HTC.

According to analysts, the new phones from HTC boosted profit in the second quarter, but that will not remain so for long. Taipei-based analyst Peter Liao of Nomura Securities said that HTC will launch new products in the third quarter but will face a tough challenge from Apple Inc. (NASDAQ:AAPL) and other brands.

HTC Corp (TPE:2498) is not the only one facing the brunt of declining earnings. Samsung, the world’s largest mobile phone maker also performed less than the analysts’ estimates. Below expectation performance of Samsung reflects and raises concerns that the rate of growth of the market share of Samsung in Smartphone may also be now declining.

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