Taiwanese smartphone vendor HTC Corp (宏達電) could consider a merger with Chinese mobile telecommunications equipment maker Huawei (華為) to survive in the competitive smartphone market, JPMorgan Securities (Asia Pacific) Ltd said yesterday.
“With a hero product [the new HTC One] unable to turn its prospects around, the other game changer could be a merger,” JP Morgan analyst Alvin Kwock (郭彥麟) said in a report.
Kwock said a combination of the expertise of Huawei and HTC could create huge synergies, especially for Taoyuan-based HTC, because it would lift HTC’s ranking in the smartphone market from the 13th-largest smartphone maker as of the last quarter to the fourth-largest with Huawei.
Photo: CNA
According to Gartner Inc, Huawei had grabbed nearly 3 percent of global smartphone market share by the end of the first quarter of the year as the world’s sixth-largest mobile phone brand, following Samsung Electronics Co’s 23.6 percent, Nokia Oyj’s 14.8 percent, Apple Inc’s 9 percent, LG Electronics Inc’s 3.7 percent and ZTE Corp’s (中興) 3.4 percent.
Holding less than 2 percent of market share, HTC has been struggling to make a comeback in the Android smartphone market after Samsung adopted aggressive marketing strategies and claimed nearly a quarter of global market share.
“Combining Huawei’s China expertise with a brand that has a superior product and consumer experience could boost future growth for the company by bringing complementary expertise in-house,” Kwock said.
As Huawei lacks a major consumer brand, but has a large home market, HTC might find it profitable to team up with Huawei because it has excellent products but lacks the right market with a strong demand for high-end smartphones, Kwock said.
Citing HTC’s second-quarter operating margin of 1.5 percent, which missed a consensus of between 2.5 percent and 3 percent by brokerages, Kwock said “there is very limited opportunity for HTC to match Samsung’s Galaxy S4 price cuts,” forecasting that the Taiwanese smartphone vendor, at best, would report flattish sales results for the current quarter.
“We like the new HTC One, but find it hard to find reasons to get involved with the stock as an investment at this time,” Kwock said.
JPMorgan reduced its rating for HTC’s shares to “underweight” from “overweight,” and cut its target price to NT$100 from NT$390 which the brokerage offered on April 13.
HTC’s shares closed down 1.03 percent at NT$191.5 in Taipei trading yesterday, underperforming the benchmark TAIEX market, which advanced 0.5 percent.
To boost sales during the second half of the year, HTC yesterday launched a red version of its new One flagship model with Taiwan’s third-largest telecoms operator, Far EasTone Telecommunications Co (遠傳電信).
“The new HTC One, with its three different colored metal casings, will become the most beautiful ‘mobile scenery’ in their daily life,” said Jack Tong (董俊良), president of the company’s North Asia-Pacific region.
Samsung cut the selling price for its flagship Galaxy S4 model by more than 20 percent within three months of the product’s launch in major markets like the US, the UK, India and Hong Kong, but HTC may not be able follow suit because there is limited room for the company to weather price drops with such a low quarterly operating margin, Kwock said.
He admitted that the brokerage had overestimated the One’s power for HTC to make a “mini-turnaround” in the short term after the model received widespread positive market reaction.
However, with Apple rumored to launch a larger-sized iPhone later this year and Samsung showing signs of rolling out a new Galaxy smartphone equipped with a flexible display next year, HTC may face more challenges ahead and not able to sustain its improving profitability momentum for too long, he added.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary
RSS