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HTC a goner? October 23, 2013

Posted by hslu in China, Economics, iPhone, jobs, Politics, Shanghai, Taipei, Taiwan.
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A disturbing news about HTC cutting down its cellphone productions in Taiwan and China certainly didn’t help HTC’s stock which has already lost almost 90% of its market value since 2011:

Chart forHTC CORPORATION (2498.TW)

10-year stock chart of Taiwan’s HTC.

I believe many Taiwanese have been 套牢了by this stock as well because they bought the stock as it was moving up in 2010 and are still holding them in their brokerage accounts after it dropped from the record high of 新台币 1,238 to 新台币 136 now: a drop of 89% in about two and half years.

HTC is short of cash and has experienced disappointing sales in the US and China. The company may disappear or it may be taken over by someone else.

Another Taiwanese stock that is also facing difficult time is Acer.

Chart forACER INC TWD10 (2353.TW)

Acer 5-year stock chart

The reduction of PC sales worldwide hit Acer particularly hard. Its newer version of notebooks and tablets just couldn’t compete with tables from Apple and Samsung. It is losing market shares fast and the company probably doesn’t have enough cash to turn it around now. It once spent millions to hire CEO from foreign countries to run the company but Acer’s market share didn’t improve with foreign management. Unless the company can come up with something significantly new, it, along with HTC, may follow Nokia and Blackberry into sunset and cease to exist soon.

Two of Taiwan’s once brilliant technology companies are experiencing such a difficult time in the market place is very disturbing. To many Taiwanese, it probably feels like that the legs which were supporting Taiwan’s future was severed at the knees. Lack of funds to promote its products in the US and China may be one of its problems even though its products are on par or even better than those came out of Apple and Samsung. When a company’s market share is shrinking, it negatively impact its cash flow which hurts everything from research, innovation, product development and marketing. When we were in Shanghai about a month ago, we went to The Bund and saw Samsung’s Galaxy S4 was prominently marketed on the big screen in Pudong.

I am certain that the top management of both companies is responsible for misjudged the competitions from Apple and Samsung. I also wondered out loud that the in-fighting between 国民党 and 民进党 in the name of democracy probably bears some blame as well.

Maybe the outflow of top-notch professionals and professors to China in search for a decent salary had something to do with this too.

The bottom line is this: Taiwan’s problem is structural and is deep-rooted. It has rocked Taiwan’s foundation and has affected Taiwan’s GDP growth. Everywhere we go, Taipei’s streets and shops are filled with well-dressed and fashionable teenagers and people in their 20’s and 30’s. The restaurants are crowed and busy. TPE airport is busy with tourist groups to China, Japan, Korea, other countries in Asia and Australia. The younger generation is spending their parents’ wealth because they can’t make it by themselves with Taiwan’s GDP growing at 2%. If Taiwan’s government is still sitting on its hands and if 马英九 is still fighting with his own party’s members, there will be more companies like HTC and Acer going down the drain. Jobs will be lost and confidence on the ruling party will be undercut too.

Maybe 马英九  should throw the government’s weight to help these tow companies. Just a thought.

 

Acer and HTC: 台湾的缩影 September 28, 2013

Posted by hslu in China, Computer, Economics, Global Affair, iPhone, Taiwan.
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531期的天下雜誌 (2013-9-8) 问:台灣科技品牌为何屡屡落敗?

The magazine was talking about Taiwan’s two tech companies:  宏碁 Acer and  宏達電 HTC

I own an Acer laptop since 2011 and liked it a lot. It’s cheap and performs as well as comparable products from Dell and HP. Although I have used Apple iPhone3 and have recently switched to Samsung’s Galaxy S4, I heard that HTC’s phones are equally good. 

That being said, these two companies’ stocks can only be described as 惨不忍睹。

See for yourself:

宏碁/Acer 5-year chart

 

My first answer is: 台湾的顶尖人才都跑到中国大陆去了。台湾的教授也跑到中国大陆去了。Pay there is better。Period。台湾, in a way, 被别人从上面和中间掏空了。The majority of businesses staying put in Taiwan are service oriented: restaurants, massage shops, travel related companies, night markets and taxis.

My second answer is: 爸爸(国民党)和妈妈(民进党)天天吵架,家里的小孩(台湾的人民和公司)这么能长的好呢?Both parties are fighting hard to strengthening their own party. They are not working for the people. They are working for their party instead.

My third answer is:台湾的教育失败。See for yourself:

wpid-20130826_011152.jpg

wpid-20130826_011313.jpg

My fourth answer is: 台湾’s problems are structural in nature. Taiwan has been very good at putting things together for other companies. It may have slacked behind on fundamental researches which are very critical in the highly competitive technology space. The central government has been throwing money in the area of social welfare to please the voters for years. By doing so, it didn’t do what it supposed to do: helps Taiwan’s businesses compete with other companies in the world which enjoy total support from their respective governments.

Taiwan’s current leader,马英九, has over the past six years been fighting for the survivor of his political life. He lacks the vision to help companies such as Acer and THC and is powerless under the constant attack from the opposition party. He hasn’t shown any leadership quality and is mired in a dismal approval rating of low teens.

My fifth answer is:The CEO of both companies probably have squandered their respective company’s good fortune, became lazy at the top and didn’t adapt to the changing landscape. Once they starts to play catching up, their technological advantages were gone. We call this: 创业维艰守成不易。

If something is not done fast, both companies, along with hundreds of jobs, will by gone soon.

 

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