Earlier this year HTC posted an operating loss of $166 million which dampened the chances of the company’s recovery. Last year it managed to make a small profit after a number of quarterly losses and it looked like recovery was possible. However, its latest iteration of the HTC One, the One M9 has suffered severely disappointing sales figures since its launch, with one report highlighting that shipments had fallen by some 43 percent compared with the last generation One M8.
As a result, HTC announced that it would reduce its workforce by some 15 percent in a bid to cut costs and increase its chance of profitability. The problem is that HTC’s share price is now so low, that it is less than the amount of cash it holds on deposit. This means that investors now consider the company to be, in theory at least, worthless.
Now that it has dropped out of the TWSE 50 index, it is possible that the share price may drop even lower, mainly because foreign investors are hesitant of dealing with companies not listed on the main Taiwan index. This opens up the company to the threat of a hostile takeover.
HTC has tried to fight its way out of trouble with a big budget advertising campaign. Back in 2013 HTC launched a $1 billion advertising campaign with Robert Downey Jr. His latest adverts for the company were released earlier this year. However even $1 billion and Robert Downey Jr. weren’t enough.
“While the current market climate is challenging, I firmly believe the measures we are putting in place to streamline our operations, improve efficiency and focus, and increase our momentum will start to show results over the coming quarters,” said Cher Wang, chairwoman and chief executive of HTC.
HTC has now been moved into the smaller Mid-Cap 100 Index, which contains 100 companies, however their combined value is only 20% of the whole market.