Several brokerages forecast a bigger loss per share for HTC Corp (宏達電) this year, even though the company has pleged to implement measures, such as focusing on non-smartphone business, to make a turnaround.
This reflects analysts’ lack of confidence in HTC, after the Taoyuan-based company provided a worse-than-expected financial guidance for this quarter.
HTC on Thursday said it might post a loss of NT$5.51 to NT$5.85 per share this quarter, below the market consensus estimate of NT$1.2 loss per share.
SLUMP
HTC shares slumped by the daily maximum of 10 percent to NT$63 on Friday, the lowest level in more than a decade. They have plunged 55.63 percent since the beginning of the year.
“Indeed, if HTC’s management makes a significant restructuring and refocuses on premium and niche markets, the company could make a comeback in the smartphone business,” JPMorgan Securities Ltd analysts said in a note to clients on Friday.
“However, from what we learned from the firm’s earnings call, management is not demonstrating such a sense of urgency,” JPMorgan analysts led by Narci Chang (張恆) wrote.
The Taiwanese firm had its moments. Its stock price once stood as high as NT$1,300 on April 1, 2011, and HTC made a net profit of NT$61.97 billion (US$1.95 billion), or NT$73.32 per share, that year.
SMARTPHONE DOUBTS
In 2011, the smartphone market had doubts over the outlook of Apple Inc after the death of chief executive officer Steve Jobs and only Xiaomi Inc (小米) had a presence in the low-end market.
Global smartphone shipments grew as much as 62.7 percent annually to 487.7 million units in 2011, but the growth rate has significantly dropped by an estimated 11.3 percent to 1.44 billion units this year due to a rising smartphone penetration rate in some markets, such as China, according to International Data Corp (IDC).
REFOCUS
“With competition heating up in this industry, HTC needs to adjust its smartphone strategy and accelerate its speed in non-smartphone business development to seek earnings outside of the smartphone market,” analysts have said.
In a conference call on Thursday, HTC chief financial officer Chang Chia-lin (張嘉臨) said the company is to reduce the number of entry-level and low-end smartphones and refocus on the premium segment of the smartphone market.
Chang also reiterated the firm’s optimism over its non-smartphone products — a wearable device, Grip, and virtual-reality headset Vive, two products that Chang said were almost the same.
WEARABLE DEVICES
HTC unveiled the two items at the Mobile World Congress in Spain in March, but they are not yet being sold.
“The company plans to launch a developer edition of Vive via e-commerce platforms at the end of this year, but did not offer an estimated launch time for Grip,” Chang said.
“Daiwa Capital Markets Inc believes it is the right move for HTC to focus on its profits rather than volume share in the market, but given the intensified competition in the smartphone industry, it will take time for HTC to return a profit,” Daiwa said last week.
Chang also admires HTC’s ambition to step into the non-smartphone business, but he said potential profits of those products may be insufficient for the turnaround HTC expected.
“In addition, HTC has to go through the transition pain to finance non-smartphone projects with cash flows from the smartphone business, but its finance is deteriorating,” he added.
CONFLICTING FORECAST
JPMorgan has lowered its share price target for HTC from NT$100 to NT$45 and predicted the company wil lose NT$21.11 per share this year.
Both Daiwa and Yuanta Securities Investment Consulting Co (元大投顧) also forecast larger losses per share for HTC this year, with Daiwa expecting loss per share to widen from NT$13.2 to NT$18.2 and Yuanta from NT$11.7 to NT$16.9.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts