HTC deemed valueless — brand’s value falls below cash on hand

11 Aug 2015

HTC has seen a 60pc plunge in its stock, which has pushed the company’s market value below its cash on hand.

HTC, maker of the flagship One M8 and One M9 smartphones, has been deemed by analysts to be a brand with no value, as a 60pc plunge in its stock pushed the company’s market value below its cash on hand.

What this means is Taiwanese phone maker HTC’s brand, factories and buildings have no value in the eyes of Wall Street.

HTC’s market price fell to NT$47bn (US$1.5bn), below the NT$47.2bn cash it had at the end of June.

The development comes after a Q2 loss of NT$5.1bn (€147.47m) and a projected loss of between NT$5.51 (€0.16) and NT$5.85 (€0.17) per share in Q3.

Despite bringing out the celebrated One M9 smartphone earlier this year, the company faces tough competition at the high end from Apple and Samsung and is being squeezed at the lower end by low-cost players like Xiaomi and Huawei.

HTC CEO, founder and chairwoman Cher Wang said that job cuts and the discontinuation of certain device models are unavoidable. The job cuts will continue into Q1 2016.

“The cuts will be across the board. They will be significant,” said HTC’s CFO Chialin Chang.

All of this is in contrast with HTC’s heyday in 2011 when it had a market capitalisation of more than NT$900bn and its various devices including the One and Desire were the best-selling smartphone brands in the US.

Sales for the third quarter are forecast to fall as much as 48pc, spelling grim times ahead for the Taiwanese phone giant unless it can trim costs and boost sales.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years