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HTC Hit By Over A Billion Dollar Share Price Plunge

The rapid rise of the Taiwanese smartphone maker, HTC, is not a good indication of positive growth at all. HTC outsold Apple briefly in the US about a year ago before experiencing a steady decline in sales. The company now joins BlackBerry and Nokia on the casualty list of the mobile industry after over a billion-dollar crash in its stock market value.

HTC announced on the evening of 3 July that its third quarter revenues may plunge to 45 percent compared to the same period last year. HTC was worth about  236 billion New Taiwan Dollars or about US $7.8 billion then, but, in a matter of three days the company would only be worth US $6.7 billion on the Taiwanese exchange.

Leading other manufacturers in using the Android operating system in the past, HTC was once seen as a rising leader in smartphone revolution. Last year in the US, while customers were waiting for the new iPhone, HTC took the lead in sales of smartphones briefly.

The company’s slow decline is a testament how competitive the smartphone market has become today.

According to a report by FactSet, 47 foreign institutional investors such as funds from Invesco and UBS, have started to sell their holdings in HTC since February this year. Another batch of 88 funds subsequently sold their holdings of the company as well.

Experts noted that the HTC problem begins in the US, where large mobile networks withdrew their subsidies for HTC phones in favor of Samsung and Apple.

HTC’s slide in popularity among many users can be difficult regain. The buzz generated by HTC around its recent flagship product, the HTC One X, was eclipsed by the release of Samsung’s more popular Galaxy SIII. Computing-speed wise, HTC One is one of the fastest smartphones in the world today.

The problem that HTC is facing has also hit BlackBerry maker Research In Motion and Nokia alike, which also forecasted profit warnings as their stock values continue to plummet.

HTC is new to the handset market. Founded in 1997, the company specializes in both pocket computers and phones unlike its present rivals including Apple (which started out as a computer maker) and Samsung (TVs and white goods).HTC gradually rose to prominence by making phones to be sold as own-label by major mobile networks before successfully selling handsets under its own name.

As Android operating system became widely accepted around the world, HTC grab it’s highest global market share of 10.7% during the second quarter of 2011, placing it as the fourth largest phone maker. HTC’s current market share dipped down to6.1% according to research company Strategy Analytics.

Compared to Samsung, HTC has a much smaller supporting mechanism for its sales. Analyst Pierre Ferragu of Sanford Bernstein estimates that Samsung is  spending six times more than HTC in marketing and product sales, while number one Apple spends about four times as much.

HTC has not released its official word about the decline of its share price but its CEO, Peter Chou, said that the company is still hoping that increase sales in India and China will eventually save the company’s fall in North America.