HTC Takes Hit From OnLive Restructuring
August 20, 2012

HTC Loses $40 Million From OnLive Restructuring

John Neumann for - Your Universe Online

Smartphone maker HTC announced a huge investment loss today in a Taiwan Stock Exchange filing, stating that OnLive, a cloud gaming service it has invested heavily into, would be undergoing restructuring because of a “lack of operating cash and an inability to raise new capital.” The company declined to elaborate on its investment.

OnLive, which streams games over the internet through PCs, also started hosting games for Android tablets and smartphones at the end of last year, in a move that was designed to collect in-game payments through upgrades and advertising, reports Michael Kan, for IDG News.

The US-based Onlive, however, has been forced to restructure because of the high infrastructure costs associated with running its service. On Friday, the company said it had been acquired by an unnamed new owner, allowing OnLive to continue to operate its services. But as part of the restructuring, an unknown number of the company´s employees have been laid off.

“Due to lack of operating cash and an inability to raise new capital, OnLive had completed asset restructuring over the weekend. HTC estimates that it will need to recognize a $40-million provision for this investment loss,” an HTC statement read.

It´s a key blow for HTC, a company that is battling against its own financial woes, with suggestions of a government bailout this month and an admission by its CEO that mistakes have been made, writes Patrick Goss for Tech Radar.

It is now, however, the only bad move recently by HTC leaders. The handset maker had originally bought a majority stake in Beats at $300 million, in order to improve the audio systems on its handsets.

But almost a year after the deal, HTC said in July it would sell back half its stake in the company, retaining a 25 percent ownership with Beats´ audio technology not performing well enough to give the smartphone maker an edge over its rivals

The new firm “will continue to operate the OnLive Game and Desktop services, as well as support all of OnLive´s apps and devices, as well as game, productivity and enterprise partnerships,” the company promised.

The company also explained to Matt Burns of TechCrunch that “a large percentage” of former OnLive staffers would be re-hired, then “substantially” more employees would also be added, and that “all previously announced products and services, including those in the works, will continue and there is no expected interruption of any OnLive services.”