HTC decides not to issue cash dividends for 2nd straight year

Taipei--Taiwan-based smartphone brand HTC Corp. (???) has decided not to distribute cash dividends for 2016 because of ongoing losses, the second consecutive year in which it will not issue a dividend.

HTC, which has faced escalating competition from Apple Inc. and Samsung Electronics rivals in the high-end smartphone segment and from Chinese vendors in the mid-to-low range segment, posted a loss per share of NT$12.81 (US$0.41) in 2016.

The 2016 figure was the second steepest loss in the company's history after a loss per share of NT$18.78 in 2015, and the weak showing led HTC to opt against a cash dividend for the second year in a row.

HTC issued a cash dividend of NT$0.38 per share for 2014, when the company posted earnings per share of NT$1.80.

The latest cash dividend decision was announced late Monday after being approved at a board meeting, HTC said. It said the company has scheduled an annual general meeting for June 15 to get final approval of the decision from shareholders.

Following news of the cash dividend decision, HTC shares were up 0.65 percent at NT$76.90 on the Taiwan Stock Exchange as of 10:26 a.m. Tuesday.

"It was predictable that HTC will not issue a cash dividend for 2016 due to its massive losses, and the lead had been factored into its share price," Ta Ching Securities analyst Andy Hsu.

"The current buying is simply a technical rebound (from a 1.80 percent drop seen Monday)."

On Monday, HTC reported NT$4.67 billion in consolidated sales for February, up only 0.09 percent from a month earlier even as its latest flagship model, the HTC U Ultra went on sale in Hong Kong, the Middle East, Southeast Asia and Europe during the month after hitting the market in Taiwan in January.

The February sales were up more than 10 percent from a year earlier, HTC said. In the first two months of this year, however, the smartphone brand's consolidated sales fell 12.58 percent from a year earlier to NT$9.33 billion.

"The February sales data was disappointing because the U series failed to give a significant boost to HTC's shipments," Hsu said. "It seems that the HTC brand is lagging behind in the mainstream smartphone market worldwide."

"HTC's efforts to enter the virtual reality market also failed to help it climb out of its sales doldrums as its VR headset only accounted for a small fraction of sales. The pace of progress in pushing for new VR applications remains slow," Hsu said.

The HTC Vive, HTC's first VR headset, was unveiled in 2015 and went on sale in 2016. It was one of HTC's gambits to diversify from its core smartphone market in the hope of generating a new revenue stream to turn around its money-losing business.

At an investor conference in mid-February, HTC said it hoped the U series would help the company trim losses in the first quarter, but after monthly sales in January and February failed to top NT$5 billion, analysts remained cautious about March.

In the fourth quarter, HTC incurred a loss per share of NT$3.77, the seventh consecutive quarter in which the smartphone vendor reported a net loss.

Source: Focus Taiwan News Channel