Analysing HTC

I look at the chart of Taiwaniese company High Tech Computer, after reading in a market research report of UBS dated 13 October 2007 about a potential project with Google (GOOG):

”Given HTC’s strong confidence in its differentiation capability, we believe the company is exploring new business opportunities that outsiders might perceive as potential risks such as ODM projects for GOOG (Google) or Sony Ericsson. We believe these are confirmations of HTC’s leading industry position in the smartphone market and could generate potential upside to the street 2008 forecast.

Our checks suggest HTC is scheduled to ship ~50,000 handsets with a GOOG OS by the end of 07. We believe the timing could be earlier than the market expectation and the volume could be small initially given it will be for developers to build more applications only. UBS Internet services analyst Benjamin A. Schachter believes GOOG needs to find carrier partners and more details could be available at GOOG’s analyst day on October 24^th.

Given the software is from Google and HTC only provides the hardware designs, we think the possibility to endanger HTC’s relationship with Microsoft should be limited. This is also because HTC could still account for over 70% share in the Windows platform in 2008 according to our estimate and thus Microsoft could still depend on HTC to generate the overall volume growth. We believe other projects with GOOG are in the plans for 08 and the volume could be more meaningful.”

I see that the market has already factored these exptectations into the price. In view of the high volatility of the price, I decide against buying the stock at this time.