HTC Shares Fall after Apple Wins Patent Case, Plans Stock Buyback
Shares of HTC Corp., Asia’s second largest manufacturer of smart phones, has dropped after losing out in a preliminary ruling by the US International Trade Commission against Apple Inc. The ITC ruling says that HTC has violated 2 Apple patents. Initially, Apple had filed an infringement suit of 10 patents, but 6 were dropped.
On July 16, HTC indicated that they would appeal the ruling. The July 15 ITC ruling is still subject to review by a six-member ITC panel in Washington. If the ITC panel upholds the preliminary decision, Android HTC phones would be banned in the US. “We are confident we have a strong case for the ITC appeals process and are fully prepared to defend ourselves using all means possible,” HTC said in a statement.
HTC shares dropped by 4.1 percent and even went to as low as NT$848 (about $29 USD), which is its lowest since January 14. The Taiex also takes a hit, losing 0.8 percent. Between July 6 and July 14, HTC shares have dropped by 20 percent. Aside from the Apple infringement case, the tight competition in the smartphone market, led by another Asian company, Samsung, has also contributed to HTC’s fall.
With these recent developments, HTC plans to buyback up to 20 million of its shares by September 18. The total purchase is about 2.44 percent of its current outstanding shares, and the buyback price will be T$900 to T$1,100 per share (about $31 – $38 USD). HTC intends to give half of the purchased shares to staff and employees, and the other half will be retired.
“HTC was intending to tell investors T$900 would be the shares’ bottom, but obviously investors did not buy that,” said Simon Liu, deputy investment officer of Polaris Financial Group’s fund arm.
But it’s not yet time to push the panic button for HTC. They still have alternative solutions to address the issue, and have never lost sight of their end goal. Last July 16, HTC has acquired S3 Graphics Co. for $300 million. Interestingly, S3 Graphics, video-games chips manufacturer, has won an infringement case against Apple through ITC. Moreover, HTC also has a pending infringement case against Apple, and the ruling is scheduled to be released by September 16.
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