HTC has sold its remaining stake in American audio company Beats for $265 million after the relationship took a turn for the worse.
The Taiwanese smartphone manufacturer has sold its remaining 24.84 per cent stake in Beats for $265 million (£165 million) with an $85 million (£53 million) pre-tax profit.
Two years ago HTC took a 51 per cent stake in Beats, an audio company founded by music producer Jimmy Iovine and rapper Dr. Dre, for $300 million (£187 million).
However, the Beats and HTC split has been on the cards for a while now, since HTC sold half of it majority stake last year for $150 million.
Sources close to HTC said the partnership between the two companies had soured, causing HTC to sell the first half for a loss.
Despite the success of the critically acclaimed HTC One, the Taiwanese smartphone manufacturer has struggled to compete with rivals Samsung and Apple, with its market share dropping to 2.8 per cent this year.
“For HTC it puts more cash in the bank, and they need cash now that they have turned operating cash flow negative,” said Jean-Louis Lafayeedney, an analyst at JI Asia in Hong Kong. “Investors have been asking HTC to shed assets and get cash back to help them regain profitability.”
Analysts have always questioned the HTC and Beats partnership, stating that the Beats audio technology wasn’t seen as a strong selling point for mobile phones.
“People don’t buy smartphones because of the headphones,” said Barclays tech analyst Dale Gai before the deal was announced. “The synergy was very small.”
HTC has recently launched a new advertising campaign fronted by actor Robert Downey Jr. in an attempt to turnaround profit losses and boost smartphone sales.
The Beats stake sale will mean HTC made $415 million over two years from its initial investment.
Next, read our HTC One tips and tricks.
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Editorial independence means being able to give an unbiased verdict about a product or company, with the avoidance of conflicts of interest. To ensure this is possible, every member of the editorial staff follows a clear code of conduct.
Professional conduct
We also expect our journalists to follow clear ethical standards in their work. Our staff members must strive for honesty and accuracy in everything they do. We follow the IPSO Editors’ code of practice to underpin these standards.
