Sat, Feb 06, 2016 - Page 13 News List

New technologies still too small to offset HTC losses

By Lauly Li  /  Staff reporter

Despite HTC Corp (宏達電) saying it had high hopes for its virtual reality (VR) headset and other Internet-connected devices, analysts said the new businesses are still too small to offset the losses in the company’s smartphone business.

“Fundamentally, we do not believe its VR [headset] can reverse the situation for HTC, as our reports suggest that the VR shipment volume will be small this year,” Yuanta Securities Investment Consulting Co (元大投顧) analyst Jeff Pu (蒲得宇) said in a note released on Wednesday, after HTC reported a net loss of NT$15.53 billion (US$457.9 million), or a loss per share of NT$18.79, for last year.

Last year’s results represented a plunge in earnings compared with the net profit of NT$1.48 billion, or NT$1.8 per share, in 2014, according to the company’s filing with the Taiwan Stock Exchange.

HTC chief financial officer Chang Chia-lin (張嘉臨) on Wednesday told investors that the company aims to turn profitable this year and expects its new business of VR headset and wearable devices to account for at least 10 percent of total sales next quarter. HTC is to formally launch its VR device in early April.

However, Pu holds a rather pessimistic view regarding HTC’s outlook this year, saying that VR would only amount for 5 to 8 percent of company’s total revenue due to limited shipments.

Pu also said he does not see any “wow” factor in HTC’s new flagship smartphone, the M10.

“From a smartphone industry perspective, we expect growth deceleration and fierce competition to continue to weigh on HTC’s earnings,” he said.

HSBC Securities Taiwan Corp is also less than upbeat about HTC, saying it is too early to judge if HTC’s VR would make a difference for the company.

“It will depend on the pricing, the readiness of its ecosystem and HTC’s business model… We believe the current business model does not help HTC generate a recurring sales stream,” HSBC analyst Yolanda Wang (王郁雅) said in a note on Thursday.

Daiwa Capital Markets analyst Kylie Huang (黃奎毓) said she is positive about HTC’s VR product in the long-term, but it would take time for the new products and the firm’s restructuring to bear fruit.

Daiwa forecast HTC would remain in the red this year and next year due to the lack of economies of scale in the smartphone segment and stiff competition, Huang said in a note on Wednesday.

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