Quanta Storage shares dive on U.S. court ruling in favor of HP

Taipei, Shares in Taiwan-based Quanta Storage Inc. took a beating for the second consecutive trading session Tuesday after a U.S. court ordered the Taiwanese company to surrender all its assets to HP Inc. to satisfy a US$439 million antitrust decision, dealers said.

The ruling, which came out last week, could financially undermine Quanta Storage, an optical drive storage specialist and subsidiary of contract notebook computer Quanta Computing Inc., prompting investors to dump the stock throughout the trading session.

On Tuesday, shares in Quanta Storage fell 10 percent, the maximum daily decline, to close at NT$28.90 (US$0.1) on the local over-the-counter (OTC) market, where the index ended down 0.04 percent at 154.56 points. On Monday, the stock also plunged 10 percent.

The losses in its share price over the past two sessions reduced Quanta Storage’s market capitalization by NT$1.89 billion to NT$8.05 billion.

Shares in Quanta Computer, which holds an almost 30 percent stake in Quanta Storage, ended unchanged at NT$70.80 on the main board Tuesday after a 1.67 percent fall a session earlier.

The order for Quanta Storage to surrender all of its cash, factories and patents to HP was handed down by the Court of Appeals in New Orleans Friday after HP argued that the Taiwanese firm repeatedly sought in April to delay HP’s efforts to collect on the judgment in January, citing coronavirus travel and business restrictions in Taiwan and China.

According to the ruling, Quanta Storage failed to post an US$85 million bond to prevent early collection of the crippling award.

In October, a Houston jury ordered Quanta to pay HP US$176 million in damages.

In early January, U.S. District Judge David Hittner tripled damages awarded to HP by a jury in October 2019 to be paid by Quanta Storage to US$439 million based on U.S. antitrust law.

“As Quanta Storage is a smaller-sized manufacturer, the latest ruling will cost the company dearly so it was no surprise that its shares faced tremendous sell-offs in the two trading session,” Mega International Investment Services Corp. analyst Alex Huang said.

“Since turnover remained moderate in the past two sessions, I expect the stock will have to take on more selling after the court’s decision,” Huang said.

Taoyuan-headquartered Quanta Storage has paid-in capital of NT$2.78 billion and runs production lines in Taoyuan and China’s Shanghai and Changshou.

In 2019, Quanta Storage posted NT$9.41 billion in consolidated sales, and NT$514 million in net profit or NT$1.85 per share. In the first quarter of this year, Quanta Storage’s consolidated sales stood at NT$2.36 billion and its net income hit NT$183 million or NT$0.66 per share.

HP sued Quanta and several other tech companies in 2013 for allegedly engaging in a price fixing scheme from 2004-2010 by rigging bids for HP orders for optical disc drives.

Other companies in the group cited in the conspiracy, such as Hitachi-LG, Sony and Panasonic, settled with HP, but Quanta Storage decided to continue the lawsuit.

Quanta Storage said the lawsuit brought by HP has no merit and it does not rule out the possibility of appealing the judgment to the U.S. Supreme Court.


Source: Focus Taiwan News Channel

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