Sat, Aug 22, 2015 - Page 13 News List

HTC shares drop amid gloomy outlook

Staff writer, with CNA

Shares in smartphone vendor HTC Corp (宏達電) yesterday dropped to a new low due to a lack of confidence that the company can make a turnaround after heavy losses last quarter and a gloomy outlook, traders said.

Amid concerns over the vendor’s bottom line, investors largely ignored an award for “Best Hardware” won by the HTC Vive, a virtual reality (VR) headset, this week at Gamescom, an annual video games trade fair held in Germany, they said.

While HTC is gearing up to take a share in the VR headset business by launching the HTC Vive, it remains to be seen whether its efforts in VR device development can strengthen the smartphone vendor’s profitability, they added.

The HTC Vive was developed with US video game supplier Valve.

HTC shares fell 10 percent, the maximum daily decline, to NT$44.55 with 28.62 million shares changing hands on the Taiwan Stock Exchange, where the weighted index ended down 3.02 percent at 7,786.92.

The stock faced tremendous downward pressure soon after the local main board opened, as the broader market was hit by turmoil in the global financial markets amid concerns over demand during a slower-than-expected pace in the world’s economic recovery, traders said.

Selling of HTC shares escalated, which pushed down the stock by 10 percent at the end of the session, as investors’ confidence in the smartphone vendor’s operations has been eroded by its latest financial results, they said. After the close, there have been orders placed by investors to sell an additional 617,000 HTC shares, indicating further losses are possible.

In the second quarter, HTC posted a loss per share of NT$9.7 due to a massive one-time charge for idled assets and prepaid expenses, while slowing global demand for smartphones was also cited as a factor in the second quarter losses.

HTC has anticipated an additional NT$5.85 to NT$5.51 in net loss per share for the third quarter amid fiercer than expected competition not only from Apple Inc and Samsung Electronics Co in high-end models, but also from Chinese rivals, such as Xiaomi.

In terms of the HTC Vive, investors remained cautious about HTC’s strategy to enter the VR turf as the market has expected the new business is to yield only limited benefits in the short term.

To boost its visibility in the VR device business, HTC has spent more than NT$300 million to invest in WEVR, a VR content developer in the US, while having kicked off a world tour to market the HTC Vive.

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