HTC Tumbles by Limit as Forecast Misses Estimates: Taipei Mover

HTC Corp. (2498), Taiwan’s largest smartphone maker, fell by the daily limit in Taipei trading after forecasting quarterly sales and profitability below analyst estimates.

The phone-maker plunged 6.8 percent to NT$266, the lowest since Nov. 30, at the close. It has dropped 11 percent this year. First-quarter sales will be NT$50 billion ($1.7 billion) to NT$60 billion, the company said yesterday, compared with the NT$64.8 billion expected by analysts.

HTC anticipates a sixth straight decline in quarterly sales as it struggles to compete with Apple Inc., Samsung Electronics Co. and Chinese suppliers. The Taoyuan, Taiwan-based company dropped out of the world’s five biggest smartphone vendors in the three months ended December.

“It remains the biggest short in handset land,” Adnaan Ahmad, an analyst at Berenberg Bank in London wrote in a Feb. 4 report. “Structurally, there is only one way for the stock to go.” He rates the company sell.

HTC forecast first-quarter gross margin of 21 percent to 23 percent, which also trailed expectations. It predicted that operating margin will fall from a record low last quarter.

Macquarie Group Ltd. analyst Daniel Chang also downgraded the stock to underperform. The company now has the equivalent of 19 sell ratings, 11 holds and four buys, according to data compiled by Bloomberg.

The phonemaker’s net income dropped 73 percent last year, while revenue declined 38 percent. It is counting on the M7 handset, which will be released on Feb. 19, to revive sales.

The new model “needs to be on another planet” to drive earnings growth, Berenberg’s Ahmad wrote.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net.

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