Following some serious staff cut-backs and media reports announcing that the company was essentially worthless, HTC have announced that they are to buy their own shares. Now, this “share repurchase” might sound confusing but it basically means that the company is buying back its shares from the marketplace. Effectively it’s investing in itself.
Management will usually tell the marketplace that they are doing this because they want to increase shareholder value and they’ll perhaps state that they’re so confident that they’re in investing in themselves.
Personally, I believe HTC are doing this because they feel that the market has discounted the share price, which has slid down considerably in the last 6 months. Recent revelations about HTC saving fingerprints as easily-accessible images and the poor valuation of the brand have hurt the company badly.
Further details below.
HTC ANNOUNCES SHARE REPURCHASE PROGRAM
Buy-back of up to 50 million shares reflects confidence in business strategy and growth potential
Taipei, Taiwan – August 24, 2015 – HTC Corporation today announced that its Board of Directors has authorized a share repurchase program to restore investor confidence and increase shareholder value.
The share repurchase program, which will run over the course of the next two months, comprises the buy-back of up to 50 million shares representing approximately 6% of the Company’s total outstanding shares. Based on today’s closing price, this will amount to around NT$ 2 billion (approx. US$ 60 million), though the total amount will be based on the final purchase price.
The repurchase of up to 6% of total shares outstanding represents a significant return to investor share capital, and reiterates the strength of the Company’s balance sheet and financial flexibility at a time when the share price does not reflect the intrinsic value of the Company.
“I welcome this opportunity to enhance shareholder value utilizing a relatively small proportion of our balance sheet,” said Cher Wang, Chairwoman and CEO of HTC. “The program reflects our Board’s belief in our ability to execute across our diversification strategy, having put the right structure and procedures in place to pursue sustainable, profitable growth. I am excited about all the opportunities ahead in smartphones, virtual reality and connected devices, and remain committed to building the HTC of the future.”