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HTC One supply issues improve 'significantly': J.P. Morgan

2013/04/14 14:17:51

Taipei, April 14 (CNA) Taiwan's HTC Corp. is likely to see a sharp rise in revenues during the current quarter thanks to the improving supply of its newest flagship smartphone, according to a U.S. brokerage firm.

J.P. Morgan Securities upgraded the stock to "neutral" from "underweight" and more than doubled its target price to NT$330 (US$11) from NT$160, citing sales contributions from the new HTC One phone.

"We have previously said that the new 'One' is HTC's last chance for a turnaround -- we now think HTC has done enough to at least see a mini-turnaround," J.P. Morgan analyst Alvin Kwock wrote in a note to clients dated April 11.

The brokerage firm's latest checks suggested that HTC's supply issues "have significantly improved in the last two weeks" and the company's second-quarter revenue is likely to rise over 50 percent from last quarter, he said.

HTC has helped its supply chain in terms of new vendor qualification, technology transfer and volume increase over the past few weeks, so the HTC One shipments are estimated to rise from 300,000 units in March to 1.2 million units in April and over 2 million units in May, Kwock said.

However, HTC still needs to face challenges from Samsung Electronics Co.'s new flagship Galaxy S4 and the anticipated low-cost iPhone from Apple Inc., he added.

HTC shares closed up 1.95 percent at NT$261.5 Friday in Taipei.

On April 8, HTC reported earnings per share of NT$0.1 for the first quarter, the lowest since the company listed on the Taiwan Stock Exchange in March 2002.

The Taoyuan-based company had revenues of NT$42.8 billion during the January-March period, missing its original revenues forecast of between NT$50 billion and NT$60 billion.

Also, the company's sales were hurt by delayed shipments of its new HTC One phone in certain key markets by as much as one month, leaving a smaller window of opportunity before arch-rival Samsung begins sales of its new Galaxy S4 this month.

Some local analysts said HTC is facing production bottlenecks because of shortages of the phone's voice coil motor and the compact camera module on its UltraPixel camera due to low yield rates.

(By Jeffrey Wu)