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HTC shares plunge on Holland sales halt, lingering weak outlook

HTC shares plunge on Holland sales halt, lingering weak outlook

Taipei, Aug. 13 (CNA) Shares of Taiwan-based smartphone vendor HTC Corp. took a beating Thursday morning after the company announced a day earlier a temporary halt of sales of the bigger version of its flagship HTC One M9 model in the Netherlands due to reported problems about 4G LTE connectivity, dealers said.
The current selling also showed lingering concerns over the company's outlook after the smartphone vendor gave gloomy guidance last month for the third quarter that pointed to a net loss of more than NT$5 per share, the dealers said.
As of 11:01 a.m., shares of HTC had fallen 8.36 percent to NT$50.40 (US$1.57), with 19.71 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.14 percent at 8,294.92 points.
"Investor confidence in HTC has become very fragile, so any negative leads could send the stock into a tailspin," MasterLink Securities analyst Tom Tang said. "That's why the temporary suspension of sales of one of its flagship models in Holland sparked sell-off soon after the local main board opened."
In a statement issued the previous day, HTC said that the company has launched an investigation into the reported connectivity problems related to the HTC One M9+, which is equipped with a 5.2-inch 2K display.
The probe followed a report on technology website Phone Arena that said HTC requested the Phone House chain in the Netherlands to suspend sales of the One M9+ and promised to release a software update to fix the problem before it goes back on sale. The sales halt directive also applied to other distribution channels in the Netherlands.
The HTC One M9+ hit retail stores there in mid-July at around US$850.
"The sales suspension in the Netherlands dealt another blow to market sentiment toward HTC at a time when investors have been wary of the smartphone supplier's profitability in the wake of its surprise forecast for the third quarter," Tang said.
In an investor conference held last week, HTC said it could post a loss per share in the July-September period ranging between NT$5.51-NT$5.85, after posting a loss per share of NT$9.7 the previous quarter.
Based on the third-quarter forecast, HTC could incur about NT$15 in net loss per share during the first nine months of this year.
"So it is impossible for HTC to report a profit for 2015, even if the company launches any killer models to tap a buying spree in the fourth quarter. Such cautious sentiment toward its bottom line has been weighing on the stock performance," Tang said.
Several foreign brokerages have lowered their target prices on HTC shares. A U.S.-based brokerage has even cut its target price on HTC shares from NT$100 to NT$45, the lowest level among the foreign institutional investors tracking the stock.
"I am also worried about HTC's operations in China. After the Chinese yuan fell sharply in recent sessions, it is possible for HTC to report foreign exchange losses from its sales in China," Tang said.
Tang said that wise investors should keep their hands off the stock until the smartphone vendor shows signs of a turnaround. (By Esme Jiang and Frances Huang)


Updated : 2021-09-27 19:16 GMT+08:00