Apple (AAPL) has hit a seriously rough patch over the past few months in terms of investor sentiment. Fears over margin impact of a hypothetical new cheaper iPhone, Samsung’s (005930) triumphant smartphone share gains, iPad mini cannibalization of iPad sales, iPhone 4 cannibalization of iPhone 5 sales… the list of worries goes on and on. As a result, Apple’s share price has dropped from over $700 in September to $500 on Monday.
At the same time, HTC’s (2498) share price has gone berserk. After dipping below NT$200 in early November, the stock came roaring back, hitting NT$300 a few weeks ago and up 5% today following Nikkei’s report on Apple’s possible component order reductions. This is happening with the latest HTC monthly report showing -18% annualized decline. That is a horrid number — but far less so than the -61% revenue decline HTC reported two months earlier.
As investors flee from the fabulously profitable and well-managed Apple, some of them are flocking to HTC, a company wrestling with collapsing profits and woefully badly managed product portfolio and marketing strategy. Does this make any sense? Probably not.
But there are glimmers of hope now clearly visible regarding HTC’s 2013 performance. The budget Windows Phone 8S just might be a value smartphone that connects with European consumers to some extent. The more expensive Windows Phone 8X model seems to have some traction in Mediterranean countries. Samsung’s lackluster ATIV S model was late to market in Europe and seems to be lagging behind HTC’s Windows Phone models in markets ranging from the UK to Germany.
Getting its Windows Phone 8 strategy right for December and January may sound like a thin reed to cling to. But for HTC, this is the first thing to go right after a year of dismal missteps ranging from awful tablet launches to a profound lack of consumer interest in its Desire launches in the summer of 2012.
In retrospect, it’s easy to see that the week when HTC announced the -61% revenue decline for the month of October was the week when speculators should have gone long, the stock for a two month swing. Which is why short-term tech stock speculation is very, very hard.