HTC shares have plunged to their lowest level since November 2005, erasing $395 million from the company’s market value, the Wall Street Journal reports. This comes despite the Taiwanese phone-maker posting a quarter-on-quarter increase in profit for the second quarter of 2013.
By mid-day on Monday, HTC shares had fallen the daily limit of 6.9 percent to reach NT$189 ($6.27), which gives the company a market cap of NT$161.04 billion ($5.34 billion).
With a profit figure of NT$1.25 billion ($41.63 million) for Q2 2013, HTC’s earnings had come in below analyst expectations for about NT$2 billion. In sobering evidence of HTC’s disappointing performance recently, despite launching its flagship One smartphone, the company’s Q2 2013 profit was down a whopping 83 percent on Q2 2012.
The WSJ report noted that brokerages slashed the company’s target price on Monday — Credit Suisse cut HTC’s price target to NT$180 from NT$290 and Morgan Stanley also revised it downward to NT$143 from NT$199. Morgan Stanley wrote in a note that HTC’s “failure to turn the ‘best ever’ HTC One into scale bodes ill for [its] long-term outlook”.
The Taiwanese company had posted record low Q1 2013 financials of $2.88 million (NT$85 million) in profit and $1.45 billion (NT$42.8 billion) in total sales. The HTC One had been supposed to help HTC stage a comeback, with a report in May saying that sales of the smartphone had reached 5 million since its launch, but it seems that expectations have fallen flat.
The company is being racked by internal turmoil too, as COO Matthew Costello became the latest C-level executive to leave his role in May, following an earlier announcement that Lennard Hoornik, CEO of HTC Asia, left the company to pursue “other interests”. That departure also came after similar exits by Jason Gordon, Vice President of Global Communications and Chief Product Officer Kouji Kodera.
HTC isn’t the only smartphone maker coming under pressure though. Rival Samsung posted pre-earnings guidance indicating $8.3 billion in profit for Q2 2013 — up 47 percent year-on-year — but missed estimates released by Reuters. The Korean company’s shares also fell more than 4 percent today.
Image Credit: Mandy Cheng via AFP/Getty Images
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