The second largest smartphone manufacturer in Asia, HTC Corp. (2498) is planning on purchasing up to 2.4 percent of its shares. According to a report in Bloomberg, this move follows a U.S. International Trade Commission rule “that it infringed two Apple Inc. (AAPL) patents.”
In practice what does this mean? While 2.4 percent doesn’t seem so much, in reality it means that it will be buying around 20 million shares in the next couple of months. Approximately 50 percent of these will be given to employees and the rest will be canceled.
Plummeting HTC Shares
In Taipei last week the HTC shares plummeted 6.5 percent to NT$907 “amid concern the patent dispute with Apple will affect earnings by crimping sales in the U.S. or boosting costs,” closing “at a six-month low of NT$870 on July 13.” The company also said it plans to appeal this ruling. The finding by Carl Charneski, the Administrative Law Judge on July 15 is anyway “subject to review by the full six-member International Trade Commission in Washington.” But if the finding is upheld, America may ultimately “ban imports of some HTC phones that run on Google Inc. (GOOG)’s Android, the nation’s most popular smartphone operating system.”
Such Bad News?
Apparently things could be worse though for HTC. In an article in Bloomberg, it was recorded that Taipei-based Beyond Asset Management Co., president Michael On, said that the company “will probably resolve the issue by paying royalties, which will raise costs.”
Together with Apple, HTC accrued more than double revenue from mobile phones in the first quarter from last year, while shipping their wares to additional markets worldwide.
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