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Shares of HTC down on July sales data
Central News Agency
2014-08-05 12:20 PM
Taipei, Aug. 5 (CNA) Shares of Taiwan-based smartphone vendor HTC Corp. came under pressure Tuesday morning after the company reported a more than 50 percent month-on-month decline in consolidated sales for July, dealers said. Due to the poor sales data, worries have been running deep that HTC will fail to achieve its third quarter sales guidance, which is expected to continue to add downward pressure on the stock, they said. As of 11: 47 a.m., shares of HTC had fallen 4.07 percent to NT$129.50 (US$4.32) with 14.05 million shares changing hands. The weighted index on the Taiwan Stock Exchange was down 1.70 percent at 9,171.44 points. "The July sales data did disappoint the market. I suspect the weak sales data came since a sales peak for its flagship HTC One M8 model became history after the second quarter," Taishin Securities Investment Advisory Co. analyst Tony Huang said. "After the July sales release, it was no surprise that HTC shares encountered heavy selling soon after the local bourse opened," Huang said. In a statement released Monday, HTC said that it posted NT$10.6 billion in consolidated sales for July, down 51.6 percent from a month earlier and also down 32.58 percent from a year earlier. In the first seven months of this year, HTC's consolidated sales fell 15.79 percent year-on-year to NT$108.8 billion. In an investor conference just a week earlier, HTC said its consolidated sales for the third quarter could range between NT$42 billion and NT$47 billion, down 27.8 percent-35 percent from the second quarter with its gross margin at 22.5-23 percent, compared with the previous quarter's 22.2 percent. "The July figure was lower than the market expectation," Huang said. "Taking the big drop in the sales report into account, many investors have feared that HTC will not be able to generate enough sales to reach its third quarter target." The July sales level was the third lowest so far this year, indicating that HTC will have to post at least NT$15.7 billion in August and September each or else it will fail to reach the lower end of its own forecast. "In fact, market sentiment had been dampened by HTC's third quarter's sales guidance. Now, fears over a failure to reach such a weak forecast is placing more downward pressure on HTC shares," Huang said, adding the third quarter could be another tough period for HTC as rival Apple Inc. will launch the next generation iPhone, likely in September. Huang said HTC has been facing stiff competition in the high-end smartphone market from Apple and South Korea's Samsung Electronics Co., and even worse, it has also run into rising competition in the lower-end model market from Chinese rivals, including Xiaomi Corp. "Unless HTC hits a turning point by unveiling new products such as wearable devices to generate more sales, it is hard for its share price to make any quick comeback," Huang said. HTC Chief Financial Officer Chang Chia-lin said his company is gearing up to penetrate emerging markets, such as China, India and the Middle East, with a goal of a 20-30 percent quarterly increase in shipments to China and an unspecified but significant increase in shipments to India. Even so, "foreign institutional investors remained cautious about HTC's earnings outlook," Huang said, referring to the recent foreign institutional selling. In the past three trading sessions, foreign institutional investors served as net sellers of about 1.5 million HTC shares on the main board. (By Esme Jiang and Francs Huang)
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