July 23, 2012
Beats Audio Buys Back Majority Stake from HTC
redOrbit Staff & Wire Reports - Your Universe Online
Struggling Taiwanese cell-phone manufacturer HTC has sold back a portion of its recently-acquired stake in sound-related products and equipment maker Beats Audio, the two companies announced on Sunday.As part of the deal, HTC will sell back half of the stake it owned in Beats, which had been slightly over 50% of the electronics corporation, according to Russ Britt of MarketWatch. The transaction will give Beats 75% ownership and controlling interest of their own company, he added.
"Over the last year, HTC and Beats have made great progress in sound innovation, product integration and brand awareness with successes like the HTC One," the two involved parties said in a joint statement released over the weekend, SlashGear's Chris Davies said.
Both companies say that they will "continue to work closely" and plan to launch "a joint global marketing campaign" later on this year, PC Mag reporter David Murphy noted. The statement also said that the agreement would give Beats "more flexibility for global expansion," but that HTC would continue to hold a "major stake and commercial exclusivity in mobile."
The sellback comes just months after HTC acquired a 51% stake in Beats Audio for $300 million, Smarthouse writer David Richards said. Beats purchased back 25% of the total shares for $150 million, or roughly the same rate that the Taiwanese smartphone manufacturer initially paid for their stake in the audio developer, which had been co-founded by rapper Dr. Dre and Interscope Geffen and A&M Records chairman Jimmy Lovine.
"Selling off some of the Beats stake will return some much-needed cash to HTC´s wallet," Davies said.
"Recently HTC said that they expect that its second quarter net profit will drop by 57 percent to $247.7 million in the June quarter, less than half what it earned in the same period a year prior. The number is significantly below what market analysts expected," added Richards. "The Taiwanese handset maker blamed poor economic conditions in Europe“¦ for its disappointing sales. In addition, HTC saw some of its phones held up by U.S. Customs after Apple was awarded an injunction for patent infringement."