Photo: Steve Kovach, Business Insider
TAIPEI (Reuters) – Shares of HTC Corp fell as much as 6 per cent on Tuesday after a change in its chief financial officer and the imminent launch of a new phone by arch rival Samsung Electronics raised concerns over the Taiwanese firm’s recovery.HTC has been losing market share to Samsung and Apple Inc in the cut-throat smartphone market as its products failed to excite consumers, and its results have lagged forecasts since the fourth quarter of last year.
“When a company changes its CFO, it often indicates that the company’s operations or financials have reached a bottleneck,” said Tom Tang, a vice president at Masterlink Investment Advisory in Taipei.
HTC said in a statement on Monday it had appointed Chia-Lin Chang, a former partner at Goldman Sachs in Taiwan who has also worked as an engineer at Motorola, as new chief financial officer, replacing Winston Yung.
The company did not give reason for the change. Yung will take up a new role in corporate development, HTC said.
Former contract maker HTC had a fairytale ride in 2010 and early 2011, when its shares more than tripled in the 14 months to April 2011 and sales grew four-fold in 1-1/2 years as consumers snapped up its innovative phones with their distinctive large clock numerals.
But it suffered an equally rapid fall from grace as its phones failed to keep up with Apple’s iPhones and Samsung’s Galaxy range. It shocked investors in November by slashing its earnings forecast, and its stock ended up as the worst performer among global smartphone companies last year, down 42 per cent.
The world’s No.5 smartphone maker reported a 70 per cent tumble in net profit in the first quarter to T$4.464 billion ($152 million), just below forecasts. [ID:nL3E8F243K] It will hold a briefing for investors on its first-quarter results on April 24.
HTC now faces another challenge after the earlier than expected roll-out of Samsung’s third-generation flagship smartphone Galaxy S, which will leave HTC less opportunity to claw back market share.
The Korean firm said on Monday it is set to launch the new gadget in London on May 3, a month earlier than an expected late May-early June timeline.
It has sold over 40 million Galaxy smartphones since the model was released in June 2010 and estimated earlier this month that its first-quarter operating profit would hit a record 5.8 trillion won ($5 billion) thanks to strong sales of the phones.
Earlier this month, HTC launched its new One series of models with fast graphic chips and advanced music and photography functions in the market, banking on them to regain its market share. The series has received generally positive reviews from analysts and tech bloggers.
However sales of HTC’s One X and S products have not increased meaningfully in Western Europe since its launch, noted Pacific Crest analyst James Faucette in a report on Monday.
Goldman Sachs analyst Robert Yen said in a note to clients on Monday that to have a CFO with industry and banking background may create a different value for the company.
“We believe the change in CFO may indicate HTC’s more aggressive attitude toward its finance department in terms of creating value other than just accounting integrity, especially the value in enhancing the uniqueness and competitiveness of its smartphone products and services,” Yen said.
At 11:58 p.m. Eastern Time, HTC traded down 5.5 per cent at T$488.50, versus the broader market’s 1.28 per cent fall.
($1 = 1138.6000 Korean won)
(Reporting by Clare Jim; Editing by Jonathan Standing)
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.