HTC Corp (宏達電) shares yesterday morning soared to NT$80 on acquisition hopes for the smartphone vendor, which has been experiencing operational difficulties, dealers said.
The buyout hopes arose after Asustek Computer Inc (華碩) on Friday said that it did not rule out acquiring HTC.
Yesterday’s price surge also reflected the fact that foreign institutional investors have been purchasing HTC shares in recent trading sessions, taking advantage of a slump in the stock triggered by its poor earnings outlook, dealers said.
HTC shares surged by the maximum daily limit of 10 percent to reach NT$83.60.
“The buyout hopes prompted many bargain hunters to pick up the stock this morning after the recent heavy selloff following the HTC’s forecasts of heavy losses in the April-to-June period,” Ta Ching Securities (大慶證券) analyst Andy Hsu said.
In a filing with the Taiwan Stock Exchange yesterday, HTC dismissed the merger-and-acquisition speculation.
“The company did not approach Asustek for a merger deal. The company would not consider merging with Asustek,” HTC said.
On Friday, Asustek chairman Jonney Shih (施崇堂) told reporters that his company had held internal “informal” discussions about acquiring HTC.
Asustek has moved into the mobile device market — with a particular emphasis on the budget smartphone sector — in a bid to offset the effects of weak global demand for PCs.
HTC did not respond directly to Shih’s remarks, saying only that it would continue to hold true to its core values of “pursuing excellence and perfection,” and that it plans to release amazing products to promote its brand around the world.
“It’s too early to say whether such an acquisition would complete, so I prefer to say that HTC’s current gains are technical in nature,” Hsu said. “With concerns over HTC’s profitability still remaining, the stock remains weak.”
HTC shares have declined dramtically since June 5, when it forecast a loss per share of between NT$9.7 and NT$9.94 for the second quarter, revising its earlier projection of a gain of between NT$0.06 and NT$0.34 per share. Before yesterday’s rebound, the stock had fallen about 18 percent from NT$92.8 on June 5.
After the revised forecast, several foreign institutional investors cut their target prices for HTC shares, and one European brokerage dropped its target price from NT$100 to NT$52, the lowest among the foreign brokerages that track HTC shares.
In the seven trading sessions before yesterday, foreign institutional investors sold a net 9.56 million HTC shares. Hsu said the data showed that foreign investors were buying the stock for trading purposes, but that the purchases have motivated many other investors to buy HTC shares.
“After its forecast of heavy second-quarter losses, HTC is unlikely to post a net profit for the whole of this year, so its share price might remain in the doldrums in the near term, despite the latest technical rebound,” Hsu said.
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