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HTC's share price leaves a brand with no value

Trading of HTCshares has resulted in the company's market cap dropping to below its cash on hand position, meaning its brand, building and factories are now effectively worthless.

Published onAugust 10, 2015

HTC One M9+-6

HTC’s recent trading – which has seen a 60 percent devaluation in the stock price this year – has effectively left the brand with no value, as its market capitalisation of NT$47 billion ($1.5 billion) is less than its cash on hand position (NT$47.2 billion).

[related_videos title=”HTC in video:” align=”right” type=”custom” videos=”624837,604007,596757,596131,596037,592809″] As a result of this trading, the company’s trading means the only thing valuable to shareholders is HTC’s cash position and effectively means the Taiwanese company’s brand, factories and buildings are worthless. It’s a far cry for the company who was once the best selling brand in the U.S. and as we’ve touched on, its product strategy has played a large part in this decline.

From the failure to build on the heights of the HTC One X+ to the failure of the new HTC One M9 smartphone to ignite thanks to more impressive devices from rivals, the capitulation of HTChas been steadily approaching and given its share price, it’s safe to say it has arrived. Its forecasts for the third quarter are less than inspiring and a 30 percent reduction in One M9 component orders thanks to poor demand has hit its bottom line. Vast competition from Apple and Samsung in the high-end and Huawei and Xiaomi at the mid-range means HTCcontinue to struggle to sell handsets.

HTC's Product Strategy - time to change?

To combat this decline, HTC’s plans to focus on the high-end where profits are much higher, with Chief Financial Officer Chang Chialin confirming that cost cutting will begin this quarter and start to show results in the financial statements by the first quarter. However, according to Bloomberg, analysts are predicting that HTCwon’t record profits until the end of 2017 with Birdy Lu, an analyst at Deutsche Bank AG, also adding:

“We think these efforts are not enough to turn HTCaround in the next two years. HTChas little chance to compete with iPhone and Samsung given limited resources, and might continue to lose shares to Chinese brands in mid/low-end segment.”

Do you think HTCcan recover from its perilous current situation? What do you think the company can realistically do to regain its former heights? Let us know your views in the comments below!

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