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HTC could miss Q1 financial target: J.P. Morgan

2013/04/01 18:48:41

Taipei, April 1 (CNA) Taiwan's HTC Corp. could miss its financial forecast for the first quarter of this year due to delayed shipments of its new HTC One flagship phone, according to J.P. Morgan Securities.

HTC could achieve revenue of only NT$45 billion (US$1.5 billion) in the January-March quarter, well below the company's estimated range of NT$50 billion to NT$60 billion, J.P. Morgan wrote in a research note dated March 29.

It also cut its estimates for HTC's shipments for the first quarter from 7.3 million units to 5.6 million units, and for the second quarter from 8.9 million units to 7.9 million units.

"We cut first-quarter and second-quarter unit estimates to reflect production issues with the new HTC One and a sharp deceleration in China sales," J.P. Morgan analyst Alvin Kwock said in the note.

"HTC's eggs are all in `One' basket now. Given the strong consumer reviews, we suggest closely monitoring the supply situation on the new HTC One in the second half of April," stated Kwock, who gave an "underweight" rating on the stock, with a target price of NT$160.

Based on J.P. Morgan's checks with telecom carriers, demand for the HTC One has amounted to between 2 million and 3 million units per month despite limited marketing activity by HTC.

However, the company faces a severe shortage in optical image stabilizers, a key component of the HTC One's camera, which means that it will be able to ship only 500,000 to 700,000 units in April, Kwock said.

HTC's drop in China sales over the past two quarters has been due to fast price cuts by rivals Samsung Electronics Co., Apple Inc. and some Chinese handset brands, he added.

Shares of HTC closed down 1.64 percent at NT$240.5 Monday in Taipei.

In a separate report, Australia's Macquarie Securities cut its target price for HTC from NT$200 to NT$142 with an "underperform" stock rating, citing HTC's worsening component shortage and increasing competition from Samsung's Galaxy S4 model.

"We don't expect the shortage to be resolved until the end of April, by which time Samsung may have begun to ship its S4 to operators," said Daniel Chang, an analyst at Macquarie Capital Securities Ltd.'s Taiwan branch.

As a result, Macquarie has lowered its monthly shipment forecast for the HTC One in the second quarter from 1.5 million-2 million to 1 million-1.5 million units, representing a revision of 25 percent to 30 percent.

(By Jeffrey Wu)
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