HTC posts 10th straight quarterly loss; shares under pressure

2017/11/10 11:40:25 fontsize-small fontsize-default fontsize-big
HTC posts 10th straight quarterly loss; shares under pressure

Taipei, Nov. 10 (CNA) Taiwanese smartphone brand HTC Corp. reported a net loss for the 10th consecutive quarter in the third quarter of this year, prompting investors to cut their holdings in the stock soon after the local equity market opened on Friday and the weakness continued, dealers said.

There are no signs that HTC shares will see strong technical support any time soon as an increasing number of investors have turned more pessimistic about the company's outlook after the latest net loss report, they said.

As of 10:58 a.m., shares in HTC had fallen 1.48 percent to NT$66.40 (US$2.19) with 4.31 million shares changing hands on the Taiwan Stock Exchange, where the weighted index was down 0.21 percent at 10,720.19 points.

"It was no surprise that investors reacted badly to the third quarter results, which raises concerns over the company's outlook at a time when competition in the global smartphone market is escalating," Hua Nan Securities analyst Kevin Su said.

In a statement released on Thursday, HTC said it incurred NT$3.1 billion in net losses for the July-September period, topping a net loss of NT$1.95 billion in the second quarter. Its loss per share for the third quarter also grew from NT$2.37 in the second quarter to NT$3.8, marking the 10th straight quarter the company has reported a net loss.

TrendForce Corp., a Taipei-based market information advisory firm, said in a research report that HTC's production in the third quarter fell 46 percent from the second quarter because the brand did not launch enough new models to attract buying in the global market.

"Many consumers simply put their purchase plans on hold, waiting for Apple Inc's premium iPhone X, which went on global sale on Nov. 3. HTC's sales were impacted accordingly in the third quarter," Su said.

"Looking ahead, investors appear downbeat about HTC's future shipments as its new flagship model -- the HTC U11 Plus -- seems to lack strong appeal with consumers," Su said.

HTC unveiled the 6-inch HTC U11 Plus on Nov. 2, and launched global sales in Taiwan, Hong Kong, Macau and China, while sales in the U.S. and European markets are scheduled to start in the second half of this month. Chang Chia-lin (張嘉臨), president of HTC's Smartphone and Connected Devices Business, said the HTC U11 Plus is one of the most important flagship models for the brand in 2017 and the company remains cautiously optimistic about shipments for the rest of the year.

In September, HTC announced it will sell part of its smartphone assets to U.S. tech giant Google Inc. for US$1.1 billion and about 2,000 engineers who belong to the planned disposed assets will work for the buyer after the transaction. The assets to be sold to Google currently provide smartphone ODM services to the U.S. client.

Taiwan's Investment Commission said HTC has filed an application for the asset disposal with the commission, and a review is expected to be completed by the end of November at the earliest.

"The asset disposal is another problem for HTC as it also means the company is expected to lose an important revenue source, which could further impact its bottom line," Su said.

(By Esme Jiang and Frances Huang)

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