Is HTC About to Go Under?

It seems like an age since HTC was the world’s smartphone market leader, long since usurped by Apple, Samsung, and Chinese upstarts Huawei and Xiaomi, and a horrendous crash in its stock value seems destined to cement the company’s position as the new Nokia.

HTC’s market price plummeted to NT$47 billion ($1.5 billion) on Monday, less than the NT$47.2 billion cash it boasted in June. Though the drop seems small, it marks a massive 9.8% fall in stock, signifying that investors consider the rest of the company has no value. As Calvin Huang of Sinopac Financial Holdings Co. in Taipei puts it, “HTC’s cash is the only asset of value to shareholders. Most of the other assets shouldn’t be considered in their valuation because there’s more write-offs to come and the brand has no value.” Sinopac has put an NT$46.50 price target on HTC’s shares.

HTC’s market capitalisation has been on the decline since 2011, during which year it exceeded NT$900 billion, and efforts to revitalise its brand with the One, Butterfly, and Desire smartphone models over the last four years have failed, leaving the manufacturer outside the top-10 smartphone producers in the world for the first time. Current sales are down 75% on its 2011 heyday.

Hopes of a recovery look increasingly slim, with third-quarter forecasts suggesting sales could fall to below 48% of estimates, leaving HTC taking a 35% cut to its projected earnings. Analysts are now predicting that the company’s bad luck will continue until at least 2017, forecasting two years of no profit.

“We think these efforts are not enough to turn HTC around in the next two years,” said Birdy Lu, analyst with Deutsche Bank AG. “HTC has little chance to compete with iPhone and Samsung given limited resources, and might continue to lose shares to Chinese brands in mid/low-end segment.”

If current trends continue, HTC could be not long for this world.

Thank you Bloomberg for providing us with this information.