HTC slide continues after sales forecast cut becomes official
Last week HTC’s stock price hit a new low when news leaked that supply chain companies had been advised that HTC was cutting their sales forecast for 2015. The stock market continued to punish the company after HTC officially announced on Friday they were cutting quarterly sales projections by as much as 35 percent. This triggered a new dip in the stock price to NT$83.60 ($2.69 USD) on Monday.
According to HTC’s latest guidance, they now expect second quarter revenues to total NT$33-36 billion ($1.06 – 1.16 billion USD) which is a major reduction from their previous guidance of NT$46.5 -51 billion ($1.49 – $1.64 billion USD). HTC also revised gross margin down from 23.0 – 23.5 percent to only 19.0 – 19.5 percent.
Perhaps most stunning and distressful for investors is HTC’s announcement that it now expects to post a net loss of NT$9.70 – 9.94 per share instead of slight earnings of NT$0.06 – 0.34 per share. Part of this loss will be driven by one-time charges to account for idle assets and prepaid expenses.
HTC says the reductions are due to a softening market for high-end Android smartphones and weaker than expected sales in China. Analysts have described HTC’s position as a “nightmare.” Calvin Huang with Sinopac Financial Holdings Co. says,
“HTC will keep losing share in the smartphone market and will keep losing money in the coming quarters.”
Currently, 65% of analysts being tracked are recommending investors sell HTC stock. Jasmine Lu with Morgan Stanley, who has analyzed book value for the company, has cut her price target and predicts HTC may slump as far as NT$57 per share.
Do you think HTC can save itself or will we be reading about its sale to another company soon?
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