HTC shares jump after settles patent issues with Apple

Comments 0
Shares of HTC Corp jumped by their permitted daily limit on Monday after the Taiwanese smartphone maker announced a global patent settlement and 10-year licensing agreement with Apple Inc.  (Reuters) Shares of HTC Corp jumped by their permitted daily limit on Monday after the Taiwanese smartphone maker announced a global patent settlement and 10-year licensing agreement with Apple Inc. (Reuters)
SummaryShares of HTC Corp jumped by their permitted daily limit on Monday after the Taiwanese smartphone maker announced a global patent settlement and 10-year licensing agreement with Apple Inc.

Shares of HTC Corp jumped by their permitted daily limit on Monday after the Taiwanese smartphone maker announced a global patent settlement and 10-year licensing agreement with Apple Inc, allowing the struggling company to focus on product development.

The settlement would give HTC a short-term boost, analysts suggested, but long-term performance would still depend on the company's ability to deliver competitive products to grab back some of the market share it has lost to Apple and South Korea's Samsung Electronics Co.

HTC's shares opened up by the maximum allowed 6.86 percent at T$241.50, and remained at that level in morning trade in a broader market that slipped 0.15 percent. The shares have bounced 24.5 percent from a closing low of T$194 two weeks ago, which was the lowest since 2005 before the company transformed into a top brand from an obscure contract maker. But the shares remain some 80 percent below their record high last April.

HTC and Apple's settlement and licensing agreement on Saturday ended one of the first major conflagrations of the smartphone patent wars. The California giant sued HTC in 2010, its first major legal salvo against a manufacturer that used Google's Android operating system.

The licensing agreement is beneficial to HTC's future product development, especially in the U.S. market, said Gartner analyst C.K. Lu.

The settlement is positive to the consumer image of both camps (Apple and Google) as they are now unlocked from a constant patent war.

The two companies did not disclose details of the settlement or the licensing agreement, but HTC said the agreement will not impact its financials and it will not change its fourth-quarter guidance.

HTC said last month it expected its fourth-quarter revenue to be about T$60 billion ($2.05 billion), down from T$70.2 billion in the third quarter and below expectations of T$74.0 billion in a poll of 23 analysts by Reuters.

It expected a gross margin and an operating margin of around 23 percent and 1 percent, respectively, falling from 25 percent and 7 percent in the previous quarter. The company said the operating margin would be hit by higher spending on marketing.

Analysts' forecasts on how much HTC needs to pay Apple range from not a very high price to as much as over $10 per phone, though they remain best guesses, based partly on the assumed $10 royalty that phone makers pay Microsoft per Windows 7

Single Page Format
Ads by Google

More from FE editor's picks

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...