Taipei - HTC plunged by the daily limit after its forecast for a loss five times the average of estimates spurred analysts to slash their valuations of the stock.
Shares slumped 10 percent to NT$63 in Taipei on Friday, closing at their lowest in more than a decade. The smartphone maker’s third-quarter loss will be NT$5.51 to NT$5.85 per share, compared with the NT$1.17 per share loss estimated by analysts. Its sales forecast given Thursday is as much as 48 percent below estimates.
HTC plans to cut staff, reduce spending and slim down its product catalog as cheaper phones from Huawei Technologies and competition from Samsung Electronics further erode its market share. Founder, chairwoman and CEO Cher Wang has stated she won’t consider mergers, even as the company fell off the global list of top 10 phone makers.
“HTC’s multiple model strategy in the past year did not work as planned,” JPMorgan Chase & Co analyst Narci Chang wrote in a note. “HTC’s current business model needs a significant makeover.”
Chang cut his target on the stock by 55 percent to NT$45, joining analysts from Credit Suisse Group , UBS and Daiwa Securities Group Inc. in reducing price estimates. None of the 29 analysts who actively cover HTC have a buy rating on the stock.
Product strategy
Sales this quarter will be NT$19 billion ($600 million) to NT$22 billion, the company said, compared with estimates for NT$36.8 billion. Revenue at the bottom end of that range would be the lowest in a decade when figures were reported at the parent level.
HTC will change its product strategy to produce fewer models over longer time intervals while focusing on a greater share of industry profits instead of shipments, Chief Financial Officer Chang Chialin said Thursday. Cost reductions will start this quarter, with the result of those cuts reflecting in the three months through March, he said.
“It’s going to result, unfortunately, in a sort of, like a headcount reduction in some of the areas that we don’t think the resources are appropriately matched,” Chang said Thursday at a media briefing.
There’ll be no one-time non-operating items this period, he said.
Thursday’s forecast came after the Taoyuan, Taiwan-based company in June cut its sales guidance for that quarter by 35 percent and wrote off NT$2.9 billion in idled assets, citing slowing demand for high-end smartphones and weaker China sales.
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