HTC Corp (宏達電), the leading maker of smartphones running on Windows Mobile and Android platforms, said yesterday its board had approved a plan to buy back 15 million of the company’s shares on the open market from today until April 9.
The size of the share buyback account is equivalent to 1.90 percent of the Taoyuan-based handset maker’s outstanding shares, HTC said in an exchange filing after the local stock market closed.
HTC said the buyback proposal was likely to cost the company up to NT$57.72 billion (US$1.8 billion), as it planned to buy the shares at between NT$280 and NT$500 per share, the filing showed. However, the company could buy more shares if necessary because the board has authorized the management to spend as much as NT$7.5 billion for an additional share buyback if necessary, the filing said.
HTC stock prices closed at NT$297 per share yesterday before the announcement of the buyback plan. Over the past 12 months, the stock traded between NT$277.5 and NT$517.1 on the market, Taiwan Stock Exchange data showed.
HTC, which has seen its shares decline by 18.96 percent since the beginning of the year, said in the filing that the purpose of the buyback plan was to “maintain the company’s credibility and safeguard shareholders’ interests.”
Between Dec. 14, 2006, and Oct. 2 last year, the company had also sought to prop up its distressed share prices by buying back 20.71 million shares on the open market.
HTC’s move to repurchase its shares came after its share prices fell by the daily maximum on Monday on news that the company planned to cut handset prices this quarter to focus on gaining market share rather than profit margins.
Without citing its sources, the Chinese-language Economic Daily News reported on Monday that HTC was considering cutting prices as much as 40 percent in the current quarter on handsets sold in Singapore, Taiwan and China as part of its strategy to boost sales during the Lunar New Year holidays. HTC denied the report and said in a statement on Monday that it would not change on its business plans for the quarter.
“HTC was battered after investors panned reports of aggressive price reductions as the company loses market share,” SinoPac Securities Corp (永豐金證券) said in a note on Monday.
HTC told an investors’ conference on Jan. 26 that it expected gross margins to fall to between 29.5 percent and 30.5 percent this quarter, from 32 percent in the previous quarter, as it aimed to raise consumer awareness of its branded products and launch more mid-range models this year.