Shares of smartphone maker HTC Corp (宏達電) yesterday nosedived after the US International Trade Commission (ITC) found that Apple Inc did not infringe on the Taiwanese company’s patents, dealers said.
HTC’s stock closed down 4.72 percent at NT$707 — after hitting a low of NT$700 — with 8.3 million shares changing hands, underperforming the benchmark index, which fell 1.36 percent to 7,359.48 points.
According to the commission’s initial ruling on Monday, Apple did not violate four of HTC’s patents that involved functions for power consumption management and phone dialing. The commission is scheduled to make its final decision in February next year.
HTC, which filed a complaint against the US consumer electronics giant in May this year as part of their escalating patent battle, said it would file an appeal.
“The ITC ruling had an impact on HTC’s share price today, while the broader market was affected by renewed fears over the European debt crisis,” Concord Securities (康和證券) analyst Henry Sun (孫豪志) said.
Sun said the legal fight was a painful process for HTC and that he believed it would not be easy for the company to gain the upper hand against Apple, which holds a large patent portfolio.
“So I’m not surprised by the ITC ruling at all. I think the current impact on HTC’s share price is kind of psychological,” he said.
Apple, with competition emerging for its top-selling iPhone and iPad, has accused Android-device makers HTC, Samsung Electronics Co and Motorola Mobility Holdings Inc of copying its technology.
It has won court rulings in Australia and Europe to limit sales of some Samsung products. The loss on Monday for HTC is the first ruling in at least six ITC cases that rivals had filed in retaliation against Apple.
“This is only one step of many in these legal proceedings,” HTC general counsel Grace Lei (雷憶瑜) said in a statement. “We are confident we have a strong case for the ITC appeals process and are fully prepared to protect our intellectual property.”
The commission in a separate case is reviewing a judge’s findings that HTC infringed two Apple patents. Also pending before the agency is a case Apple filed seeking to block imports of HTC’s Android phones and Flyer tablets. HTC filed a second case against Apple, with a trial scheduled for August next year.
The companies are vying for a share of the global smartphone market, which grew 65 percent in the second quarter from a year earlier, according to market researcher IDC.
Apple is the world’s biggest maker of smartphones, with 19 percent of the market, and HTC is fifth, with 11 percent, according to IDC.
Sun said he was more concerned about HTC’s sales for the fourth quarter, the seasonal peak for the high-tech sector.
“With falling global demand, I am afraid that the company will not reap the benefits from the peak season effect during the quarter as it has in the past,” Sun said.
Sun added that US-based telecom operators Sprint and Verizon had defected to Apple, which could mean slower sales for HTC in the US, which accounts for almost 40 percent of the company’s total sales.
The shutdown of part of the Suzhou facilities of Catcher Technology Co (可成科技), a Taiwanese metal housing maker and an HTC supplier, is also likely to affect HTC’s production, Sun said.
“I expect HTC’s sales for the fourth quarter to increase by 5 percent at the most from the third quarter, or even stay flat. It will be a lackluster performance for the quarter,” he said.
During the July-to-September period, HTC posted NT$18.64 billion in net profit, a quarterly high for the company. Its revenue totaled NT$135.82 billion, up 9 percent from the second quarter and 79.07 percent from a year earlier.
Additional reporting by Bloomberg
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