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Monster Buyback: HTC To Sell Back Remaining Beats Stake


Smartphone maker HTC was once at the top of its game, but recently its market share has been significantly eroded by competitor Samsung. When HTC was riding high, it formed a strategic partnership with popular headphone maker Beats Electronics, purchasing a 51 percent stake in the company. As the stock declined, HTC sold back 25 percent to Beats last year. Now it’s selling the remainder back to the company. According to

“[HTC] is selling its remaining stake in headphone maker Beats Electronics LLC for $265 million. HTC will close the sale of its 24.84 percent stake in the closely held company in the fourth quarter, and it expects a NT$2.52 billion ($85 million) pretax profit, according to a statement to Taiwan’s stock exchange. Beats, founded by music producer Jimmy Iovine and rapper Dr. Dre, also will repay a $150 million promissory note, plus accrued interest.

“The deal comes two years after HTC took a 51 percent stake in Beats for $300 million and started using the Santa Monica, California-based company’s sound technology. HTC since has struggled to compete with devices from Samsung Electronics Co. and Apple Inc., with its market share falling to less than 3 percent of the $280 billion smartphone industry.”

The Dr. Dre run Beats Electronics was rumored to be interested in the buyout of HTC in order to pursue other potential partners. For HTC, the deal comes at a time when it needs to improve cash flow, as sales have been far from stellar. According to

“As of right now, HTC is a perilous situation. The company’s sales revenue is down, profits are down, operating cash flow is now negative and more than a few pundits have already written the company off (or are close to doing it). Worse yet, the HTC One is nearly universally praised as the best Android phone available, yet the sales numbers do not reflect the title. They built the phone everyone wanted, yet can’t get anyone to buy it.”

HTC doesn’t have an innovation problem, it has some of the best devices on the market. However, it hasn’t been able to market products effectively, something they hope their $1 billion ad campaign with Robert Downey Jr. will correct.


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