Analysts unsure if HTC’s rebound bid will succeed

By Helen Ku  /  Staff reporter

Thu, Oct 17, 2013 - Page 14

Smartphone vendor HTC Corp (宏達電) may be employing the right strategy to make a turnaround in the competitive smartphone market, but whether the Taiwanese company will soon receive a return for its efforts is still not certain, Yuanta Securities Corp (元大證券) said yesterday.

The brokerage made the remark after HTC on Tuesday launched its 5.9-inch One Max in China, ahead of the smartphone’s home market debut in Greater Kaohsiung tomorrow.

The One Max is a larger version for the company’s flagship One smartphone.

“We believe that HTC is steering its operations in the right direction,” Yuanta analyst Dennis Chan (詹宗勳) wrote in a report.

“However, it is too early to gauge if the potential positive impact will be enough to help turn around the company,” he added.

In the report, titled “Here’s To Change” — echoing HTC’s new slogan, which is meant to express to consumers its resolution to reclaim its declining market share — Chan forecast that the compnay would only ship about 150,000 units of the One Max every month once it is available on the market.

Chan attributed his pessimistic shipments estimate to the One Max’s product specifications and design, saying that its Snapdragon 600 1.7 gigahertz (GHz) quad-core processor from Qualcomm Inc is less powerful than the Snapdragon 800 2.3GHz quad-core processor in Samsung Electronics Co’s 5.7-inch Galaxy Note 3, and that One Max’s fingerprint sensor is less user-friendly than the one on Apple Inc’s iPhone 5S.

CLSA Asia-Pacific Markets analyst Cheng Chao-kang (鄭兆剛) said there was “no surprise” with the One Max and predicted that HTC’s fourth-quarter revenue would decline 11 percent from the previous quarter and 30 percent from a year ago.

UBS Securities analyst Arthur Hsieh (謝宗文), who also has low expectations for sales of One Max, on Tuesday lowered his revenue estimate for HTC by 29 percent to NT$33 billion this quarter, from his previous forecast of NT$49 billion.

The new estimate represents a quarterly decline of 29 percent and an annaul fall of 50.6 percent, Hsieh said, adding that HTC could remain in red with NT$1.55 loss per share this quarter.

HTC reported a loss of NT$2.97 billion (US$101.04 million) last quarter, its first quarterly loss since the fourth quarter of 1999, after the company’s sales of NT$47.05 billion last quarter missed its forecast range of between NT$50 billion and NT$60 billion.

Citing the One Max’s less-than-ideal product design, Chan cut his estimate for HTC’s fourth-quarter sales to NT$40 billion, with earnings per share of NT$0.05.

If HTC launches another new product in the first quarter of next year — not this quarter — the company’s sales next quarter will drop by a further 11 percent quarter-on-quarter, he added.

For the year, Chan estimated that the smartphone vendor would post losses per share of NT$1.69, followed by earnings per share of NT$6.18 for next year.

Chan retained his “sell” rating on HTC stock, but cut his target share price to NT$81 from NT$90.

HTC shares closed down 1.57 percent at NT$125.5 yesterday, underperforming the benchmark TAIEX, which fell 0.43 percent.