HTC Shares Tank on Apple Patent Ruling

Published on July 18, 2011
by John Paczkowski

HTC’s share price declined more than six percent Monday as investors reacted to a preliminary International Trade Commission ruling that found the company infringed two Apple patents. Clearly, the possibility that the ITC might ban the import and sale of the Taiwanese company’s smartphones or force it into a costly licensing deal with Apple is troubling the market.

“If Apple views HTC as one of its major competitors in US market for high end smartphones and leverages these legal tactics to seek royalty payments, this could raise HTC’s cost structure relative to Apple and other Android makers,” Morgan Stanley analyst Jasmine Lu said in a note to clients. “[And that] could adversely affect HTC’s share opportunity if other Android makers are not required to pay the same royalties as HTC in the near future.”

HTC plans to appeal the ruling. But as many an observer has pointed out, preliminary ITC determinations are seldom overturned.

Return to: HTC Shares Tank on Apple Patent Ruling