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No comment from HTC on Google deal; shares plunge on sales data

2017/09/07 12:48:43

Taipei, Sept. 7 (CNA) Taiwan-based HTC Corp. (宏達電) has declined to comment on a media report that said the company is likely to sell its loss-incurring smartphone operations to U.S. tech giant Google Inc.

Meanwhile, its share price took a beating on the Taiwan Stock Exchange Thursday after the company reported a day earlier that its sales for August dipped to a 13-year low amid escalating competition in the global smartphone market, dealers said.

As of 12:38 p.m., HTC shares had fallen 6.42 percent to NT$64.20 (US$2.14), with 16.27 million shares changing hands, underperforming the main board, where the weighted index lost 0.09 percent to 10,538.58 points.

The report said HTC and Google are expected to strike a deal by the end of this year as the Taiwanese firm cannot bear any additional losses from its smartphone operations. The report gave the market a different perspective about HTC's future development since the market had widely speculated that the company will dispose of its virtual reality assets.

In the second quarter of this year, HTC posted NT$1.95 billion in net loss, with loss per share at NT$2.37, marking the ninth consecutive quarter in which the company incurred losses, at a time when the Taiwanese firm was faced with stiff competition not only in the high-end smartphone segment but also in the low to mid-range smartphone segment.

HTC has built good business ties with Google, as the Taiwanese firm started to roll out Google's Pixel and Pixel XL smartphone models on a contract production basis last year. It is expected that Google will unveil additional Pixel smartphone models this year and that HTC will provide contract production services for the U.S. client.

Market analysts said that the close business relationship between the two companies make the speculation that Google will buy HTC's smartphone assets understandable.

Analysts said that the asset sale report, however,failed to boost HTC shares on the main board Thursday, but the stock was affected by the poor sales data for August.

In a statement released Wednesday, HTC said that its consolidated sales for August fell 51.6 percent from a month earlier to NT$3 billion. The August figure was also down 54.4 percent from a year earlier to a new low since September 2004, when its revenue stood at NT$2.998 billion.

In the first eight months of this year, HTC's consolidated sales stood at NT$39.86 billion, down 14.4 percent from a year earlier.

Due to losses incurred by its smartphone operations, HTC has entered the VR business by launching its first VR headset -- the HTC Vive -- in 2015. The gadget went on global sale in April 2016, a move that was aimed at reducing the impact of rising competition in the smartphone market.

(By Jeffrey Wu and Frances Huang)
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