Share prices of smartphone maker HTC Corp (宏達電) rose yesterday as it announced it will carry out a buyback plan to purchase up to NT$6.3 billion (US$197 million) worth of shares to “boost employee morale.”
A company board meeting late on Sunday night approved the share repurchase proposal to buy back 10 million shares at NT$526 to NT$631 per share between today and Sept. 12.
The buyback will account for 1.29 percent of the company’s total shares in circulation.
The shares will later be resold to company employees, according to the board meeting decision.
“The company wants to transfer the shares obtained from the repurchase scheme to the employees, a move we expect will boost employee morale,” an HTC spokeswoman said.
BRAIN DRAIN
While many market observers said that HTC is likely to face a brain drain of talented staff to its rivals due to fierce competition in the smartphone market, the spokeswoman said only that “the reason behind the share buyback is very simple. Do not over-analyze the situation.”
However, Edward Chen, an analyst with First Capital Management Ltd, said the company is expanding its business globally and that it is very important to find ways to keep its employees.
“The transfer of company shares from the buyback is a good way of keeping employees,” Chen said.
“HTC has an ambition to further polish its brand image in the global market and lifting employee morale and encouraging them to work hard is part of these efforts,” he said.
In the second quarter of this year, HTC posted NT$60.53 billion in sales on rising demand for high-end mobile phones such as Desire, Legend, Incredible and EVO, up about 60.6 percent from the first quarter and beating market expectations.
RECORD SALES
Last month alone, HTC sales hit a record high of NT$23.86 billion, up 4.98 percent from May.
“The company has healthy fundamentals and plenty of cash on hand. The share buyback is unlikely to affect its financial condition,” Chen said.
According to HTC, the company has about NT$68.2 billion in cash on hand.
Chen said the buyback scheme is expected to continue to lend strong support to the company’s share price.
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