Thu, Sep 05, 2013 - Page 13 News List

HTC Corp’s sales fall for third consecutive month

IN DECLINE?Sales fell 16.28% from July and 45.18% from a year earlier. Investors also worry about a talent drain from a fraud probe and an Apple engineering center

By Helen Ku  /  Staff reporter

Smartphone vendor HTC Corp (宏達電) yesterday reported that revenue last month contracted for a third consecutive month, as sales of the company’s flagship product remained weak.

Sales dropped to NT$13.16 billion (US$442.22 million) last month, the second-lowest level since February 2010, when the company generated NT$10.19 billion in sales.

Last month’s figure represented a decline of 16.28 percent from July and 45.18 percent from a year earlier, the company said.

First Capital Management Inc (第一金投顧) said that HTC would have to generate more than NT$20 billion in sales this month to achieve its third-quarter sales target of NT$50 billion.

The company is likely to see flat sales in the fourth quarter if new products, including a larger One Max model, fail to create demand, First Capital said.

“However, it remains to be seen if HTC can realign its business management in the near term, as investors are still worried about a talent drain at the company following an investigation of company employees for fraud,” SinoPac Securities Co (永豐金證券) analyst Frank Kuo (郭勁甫) said in a report released on Monday.

The Chinese-language Next Magazine reported yesterday that executives who were suspected of leaking designs, including HTC research department vice general manager Chien Chih-lin (簡志霖) and department director Wu Chien-hung (吳建弘), were working with the Chengdu City Government in China.

The report said Chengdu promised to fund plants, production and marketing for a new smartphone company if the HTC employees could pass over technology and a small amount of cash.

The employees are also suspected of stealing about NT$20 million from the company, the magazine said.

HTC declined to comment on Next’s report.

The report sent the company’s stock down to its daily limit, closing at NT$137.5 yesterday, a record low since December 2004, while the benchmark TAIEX shed 0.06 percent.

In related news, UBS analyst Arthur Hsieh (謝宗文) said Apple Inc’s establishment of an engineering center in Taiwan could potentially increase HTC’s turnover rate and affect the company’s overall competitiveness.

Hsieh was referring to recent media reports that Apple had begun hiring engineers to develop new iPhone and iPad products in Asia.

In a note released on Tuesday, Hsieh reduced his estimate for HTC’s third-quarter sales to NT$50.1 billion from NT$54.5 billion, and forecast that the company’s fourth-quarter sales would decline by 2.1 percent sequentially.

UBS retained its “sell” rating for HTC and cut its price target to NT$74 from NT$86.

Additional reporting by Bloomberg

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