HTC shares up after turning a profit in Q1

Taipei, Shares of Taiwan-based smartphone brand HTC Corp. moved higher Tuesday morning after the company turned a profit in the first quarter because of the sale of its smartphone contracting assets to Google Inc., dealers said.

The gains were limited, however, by HTC's declining sales in its core branded smartphone business, which have left many to wonder whether it can be profitable without the benefit of the one-time gain from the asset sale.

As of 11:28 a.m., shares of HTC had gained 2.47 percent to NT$58.10 (US$1.95), off an early high of NT$59.50, with 11.75 million shares changing hands on the Taiwan Stock Exchange, where the weighted index was up 0.74 percent at 10,682.92.

"The current buying came from traders who largely jumped in for trading purposes," MasterLink Securities analyst Tom Tang said. "As few can be sure when HTC will really make a turnaround, some investors shifted to the sell side, locking in their earlier gains."

In a statement released Monday, HTC said it posted a net profit of NT$21.1 billion in the first quarter, compared with a net loss of NT$9.8 billion in the previous quarter, with earnings per share at NT$25.70.

The first quarter results, which ended an 11-quarter losing streak, benefited from a deal in which the company disposed of its smartphone ODM assets to Google last year.

In September 2017, HTC announced it was selling its smartphone ODM assets to Google for US$1.1 billion. Under the deal, about 2,000 engineers who had previously worked for HTC joined Google, and the U.S. tech giant was granted a non-exclusive right to use the Taiwanese company's patents.

"The first quarter net profit is expected to help HTC break even or even post small earnings for this year, but, after the one-time gains, the company is likely to fall into the red again," Tang said.

In 2017, HTC incurred a net loss of NT$16.91 billion and a loss per share of NT$20.58, the highest since it listed on the Taiwan Stock Exchange in March 2002. In April, HTC had consolidated sales of NT$2.1 billion, down 24.18 percent from a month earlier and 55.47 percent from a year earlier.

The April figure was the lowest monthly sales for HTC since August 2004, when it had sales of NT$2.05 billion. It was also the third consecutive month HTC reported sales under NT$3 billion.

"Due to the continued losses, HTC's book value per share fell to around NT$41.05 in 2017 from NT$96.69 seen in 2012," Tang said, "If HTC returns to the red after this year, the book value will undoubtedly fall further."

Last week, HTC said it will unveil a new product on May 23, which prompted market speculation it will be the new flagship model -- the HTC U12+.

HTC said it hoped the upcoming new model will boost its sales in upcoming months, but Tang expressed reservations that the new model would help the company emerge from its doldrums.

Source: Focus Taiwan News Channel