HTC sues Citigroup in Taiwan
HTC Corp, the world's No.4 smartphone maker, has filed a criminal complaint against Citigroup Inc's Taiwan unit, alleging the bank published false information that led to a fall in HTC's share price, a Taiwan prosecutor said.business Updated: Dec 13, 2011 12:40 IST
HTC Corp, the world's No.4 smartphone maker, has filed a criminal complaint against Citigroup Inc's Taiwan unit, alleging the bank published false information that led to a fall in HTC's share price, a Taiwan prosecutor said.
HTC, whose rapid rise in the cut-throat handset industry had made it an investor darling until early this year, has lost much of its luster in recent weeks as its models struggle to compete with Apple Inc's iPhone and Samsung Electronics Co Ltd's Galaxy range.
Its shares have tumbled from a high of more than $39.72 in April to as low as T$403 earlier this month. HTC has twice cut its earnings forecast recently, stoking investor concern over future profits.
"HTC submitted its case in August and we have been in the process of handling it," said Huang Mou-hsin, deputy chief prosecutor at the Taipei Prosecution Office. "HTC sued Citi Global Markets for violating stock transaction law," he said, declining to elaborate further.
HTC declined to confirm or deny the action, saying it did not comment on legal cases. Citi Global Markets Taiwan officials had no immediate comment.
Taiwan newspapers reported on Tuesday that HTC and Citi had run out of time for a settlement, so prosecutors had stepped in.
"HTC is using the lawsuit as a gesture to say its outlook is not as bad as the research report indicated and to ask foreign analysts to keep quiet or at least to stay a bit low-profile," said K.H. Lin, vice president at the fund unit of Yuanta Financial Holding Co Ltd.
"For long-term investors, however, HTC is probably not a good buy. We are very worried about the future of HTC due to its patent war with Apple and others. The lack of a powerful pool of patents is the most vulnerable part for HTC and other Taiwan companies."
HTC is fighting legal battles on several fronts and faces a crucial ruling in the United States on Wednesday in a patent case with arch-rival Apple that could result in a ban on HTC's handsets being sold in the United States.
The suit is seen as a proxy for the larger fight for market share between Google Inc's Android cellphones and tablets, many of which HTC makes, and Apple's product line.
Samsung, which also makes Android products, is locked in similar court fights with Apple.
The International Trade Commission, a US trade panel that investigates patent infringement involving imported goods, will deliver its ruling on Wednesday.
HTC shares were up 2.5 per cent in early Tuesday trading at T$426.50.
"The rise is because the current share price is too low and valuations are way under," said KGI Securities analyst Richard Ko in Taipei. "The price already reflects the risk of future court judgments."