HTC Corp (宏達電), Asia’s second-largest maker of smartphones, passed Nokia Oyj’s market value as consumers switch to more powerful, feature-rich phones at the expense of the Finnish maker’s simpler models.
The 5.3 percent gain of HTC shares in Taipei trading on Wednesday took the Taoyuan-based company’s market value to US$33.8 billion, exceeding the US$33.6 billion value of its competitor.
Nokia climbed 1.1 percent to 6.26 euros.
HTC shares closed unchanged yesterday.
HTC stock tripled in the past year as smartphone shipments grew at more than twice the pace of the wider market for mobile handsets.
Nokia shares slumped 19 percent this year as competition for basic phones intensified and the company’s Symbian operating system for high-end models lost ground to Apple Inc’s iOS and Google Inc’s Android.
“Smartphones have changed the mindset of consumers,” said Jeff Pu (蒲得宇), who rates HTC “buy” at Fubon Financial Holding Co (富邦金控). “Previously people went into a store and asked for Nokia or LG. Now they ask for Apple and HTC.”
HTC’s 33 percent surge in market value this year means it now lags behind only Apple and Samsung Electronics Co among smartphone manufacturers.
Nokia’s market share dropped to 28.9 percent last year from 36.4 percent in 2009 because of stiffer competition in low-end phones and the failure to match rivals’ offerings of high-end phones, Gartner said. Nokia maintained the overall lead, selling 461 million units last year. HTC sold 24.7 million devices for the year, Gartner said.
Smartphones, which command a higher price and wider margins than normal phones, accounted for 23 percent of Nokia’s shipments in the fourth quarter, according to estimates from Credit Insights Inc.
Moody’s Investors Service yesterday cut Nokia’s debt rating, citing the Finnish company’s “weakened market position” and lower profit margins.
The long-term rating was reduced one step to A3, the seventh-highest of 10 investment-grade ratings, with a negative outlook, Moody’s said. The move followed Standard & Poor’s cut to A- on Thursday last week. Nokia had about 5.3 billion euros (US$7.6 billion) in long-term debt at the end of last year.
“The rating downgrade primarily reflects Nokia’s weakened market position in its core business, mobile devices, which has reduced the company’s margins and funds from operations,” Wolfgang Draack, Moody’s senior vice president and lead analyst for Nokia, said in the statement.
HTC’s operating margin, which measures the percentage of sales less the cost of manufacturing and sales, was 16 percent in the quarter that ended on Dec. 31.
Nokia’s was 7 percent.
Of 36 analyst recommendations compiled by Bloomberg, 29 said investors should buy HTC shares while none said sell. Nokia has 23 “sell” ratings and 19 “buy” recommendations.
Nokia in February announced it would adopt Microsoft’s Windows platform as its primary operating system for phones, helping it cut its US$4 billion budget for research and development in its devices division.
As Nokia moves into Windows models, HTC’s growth will be driven by its Android handsets, Pu said. Global smartphone shipments will climb 50 percent this year and Android will become the leading operating system for the devices, ahead of Research in Motion Ltd’s BlackBerry and Apple’s iOs, IDC said in a statement on Tuesday last week.
At NT$1,200 per share, HTC’s stock is the most expensive in the Taiwanese market.
Pu raised his price estimate on the stock for the 10th time in the past year to NT$1,500, citing continued sales and shipment growth.
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