Analysts at foreign brokerages slashed their target prices for HTC Corp (宏達電) over the weekend after the smartphone maker on Friday offered a worse-than-expected guidance for the fourth quarter.
The downward adjustment is likely to add further pressure on HTC, which already saw its shares edge down 4.84 percent to end at NT$236 in Friday trading before it released its bearish outlook for the quarter.
During its earnings conference call, HTC forecast its revenue will fall by 14.5 percent in the period between this month and December to about NT$60 billion (US$2 billion) from NT$70.2 billion in the third quarter, while gross margin and operating margin are set to decline to 23 percent and 1 percent, from 25 percent and 7 percent respectively.
Based on HTC’s guidance, the company might lose its No. 5 smartphone firm spot by shipping less than 7 million smartphones in the fourth quarter, Nomura Securities and CLSA Asia-Pacific Markets said.
At least five foreign brokerages have slashed their target prices on HTC, with BNP Paribas cutting the most, from NT$224 to NT$100.
BNP Paribas analyst Laura Chen (陳佳儀) said HTC’s unexpected sales slide was mainly due to a delay in new product launches and less effective spending on marketing.
Over the past two years, the Taoyuan-based company has been steadily exploring Asian markets, especially China, by building distribution channels as well as increasing advertising in the region, leading its marketing expenses to account for between 8 percent and 12 percent of its total revenue, higher than Samsung Electronics Co’s 5.8 percent.
However, Chen said the company might still be facing strong headwinds.
“We are worried that HTC’s recent strong growth in China will be short-lived,” she wrote in a report.
Analysts also warned HTC would likely report a quarterly loss in the near future due to tough competition and shrinking margins in its launch of low-cost products in China.
Hua Nan Securities Investment Management assistant vice president Green Wu (吳積霖) yesterday said HTC could report loss for this quarter and next quarter.
With regard to HTC’s Windows Phone 8X and 8S, which are estimated to hit the market next month, Wu maintains a downbeat attitude.
“Microsoft Corp does not allow its hardware partners to modify its software as much as Google does. It limits HTC from adding special features like HTC Sense to differentiate its product from others,” Wu said. “It is also doubtful whether the market will adopt the Windows Phone.”
Additional reporting by CNA
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to