Wed, May 09, 2018 - Page 12 News List

HTC posts profit on sale of ODM assets to Google

Staff writer, with CNA

HTC Corp (宏達電) shares yesterday rose in early trading after the company announced that it turned a profit in the first quarter of this year thanks to the sale of its smartphone original design manufacturing (ODM) assets to Alphabet Inc’s Google.

However, the gains were limited by HTC’s declining sales in its core branded smartphone business, which left many wondering whether it can remain profitable following the one-off gain from the asset sale.

“The current buying comes from traders who largely jumped in for trading purposes,” MasterLink Securities (元富證券) analyst Tom Tang (湯忠謙) said. “As few can be sure when HTC will really make a turnaround, some investors shifted to the sell side, locking in their earlier gains.”

HTC in a statement on Monday reported a net profit of NT$21.1 billion (US$708.46 million) for the first quarter, compared with a net loss of NT$9.8 billion in the previous quarter, with earnings per share of NT$25.70.

The first-quarter results ended an 11-quarter losing streak.

In September last year, HTC announced that it was selling its smartphone ODM assets to Google for US$1.1 billion. Under the deal, about 2,000 HTC engineers joined Google, and the US tech giant was granted a nonexclusive rights to use the Taiwanese company’s patents.

“The first-quarter net profit is expected to help HTC break even or post small earnings for this year, but after the one-off gains, the company is likely to fall into the red again,” Tang said.

Last year, HTC incurred a net loss of NT$16.91 billion and losses per share of NT$20.58, the highest since its listing on the Taiwan Stock Exchange in March 2002.

As of last month, HTC had consolidated sales of NT$2.1 billion, down 24.18 percent from a month earlier and down 55.47 percent from a year earlier.

The figure was the lowest monthly sales for HTC since August 2004, when it was NT$2.05 billion.

It was also the third consecutive month in which HTC reported sales of less than NT$3 billion.

“Due to continued losses, HTC’s book value per share fell to about NT$41.05 last year from NT$96.69 in 2012,” Tang said, “If HTC returns to the red after this year, the book value will undoubtedly fall further.”

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