HTC Files Complaint in Taiwan Against Citigroup Employee
Comment of the Day

December 13 2011

Commentary by Eoin Treacy

HTC Files Complaint in Taiwan Against Citigroup Employee

This article by Tim Culpan and Adela Lin for Bloomberg may be of interest to subscribers. Here is a section:
HTC on Nov. 23 cut its fourth-quarter sales guidance by about 20 percent, less than a month after forecasting revenue may climb to a record, citing competition and the global economy. That move prompted at least six brokers including Citi and Credit Suisse Group AG to cut their ratings on the stock.

“We think HTC's product offering is no longer ahead of its global peers, which is leading to muted shipments growth and market share decline in coming quarters,” KGI Securities Co. Taipei-based analyst Richard Ko wrote the following day.

Eoin Treacy's view HTC is a relatively new, but high profile, entry into the smartphone market and has rapidly overtaken a number of other more established companies. The question now is whether it can sustain this impressive growth.

The share broke out of a lengthy range in August 2010 and rallied impressively to an accelerated peak of more than TWD1200. It pulled back to test the 200-day MA by June but the TWD1000 area only provided brief respite and the share extended the decline. It is now deeply oversold relative to the 200-day MA.

This article, also from Bloomberg dated December 7 th may also be of interest. Here is a pivotal section:

The International Trade Commission is set to rule Dec. 14 in a patent complaint lodged by Apple against HTC. The decision was postponed from the original date of Dec. 6. A ruling for Apple may lead to a ban on U.S. imports of HTC devices.

Access to the US market is integral to HTC's success. Tomorrow's judgement will either reconfirm bearish sentiment, much of which already appears, to be in the price or it may offer a catalyst for short covering and a potential unwind of the deeply oversold level relative to the 200-day MA. If the latter, investors are likely to take notice of HTC's 8%+ yield.

Back to top