Beats Electronics May Give HTC The Boot In Favor Of A New Investor

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Whether you like the company or not, individuals are grabbing Beats Electronics’ products left and right. It’s not a surprise then that Beats is aiming to branch out into some brand-new frontiers, and it couldn’t want to do it without eliminating some old baggage first. The Wall Street Journal is reporting that Beats is considering buying out Taiwanese gadget maker HTC’s remaining stake in the company and is also attempting to lock down a brand-new investor to assist fund its expansion into consumer electronic devices and auto tech.

At this point, there’s no word on just how much such an offer would cost, or if HTC ares about to sell. To actually get a feel for the circumstance though, we’ve to do a little rewinding.

This entire sordid circumstance drew back in August 2011 when HTC exposed that it got a bulk stake (about 50.1 %, to be certain) in Beats Sound, an offer that cost the Taiwanese business just north of $300 million. It was not long until the first Beats Audio-powered smartphones began rolling off of HTC’s manufacturing lines, and ever since almost every one of the company’s significant smartphones bore that familiar red logo design somewhere on its body.

Of course, that relationship was not without its rough patches. Between the moment HTC finalized its handle Beats Sound and today, the business has actually been absolutely battered – sales revenue is down, profits are down, and even more than a few experts have actually already composed the business off (or are close to doing it). The situation grew so grim that HTC discovered itself selling nearly half of its stake back to Beats Sound in mid-2012, which apparently resulted in a bottom line of about $4.8 million for the Taiwanese gadget maker.

What’s still unclear at this point is what this turn of occasions might mean for Beats Sound in smartphones going ahead. If Beats undoubtedly buys out HTC’s stake, it’s not inconceivable that other smartphone producers might swoop in and license whatever Beats Audio possessions the business originally made available to HTC. And for all we understand, HTC may be among them – it can just decide to fold Beats Sound into its phones like absolutely nothing ever occurred, albeit without the majority of popular country condition. It’s near-impossible to telephone there without a closer understanding of the contract the two business forged, however I’d not expect the Beats Audio brand to continue to be inactive in the mobile space for very long (if at all).

But Beats’ bid for an additional investor comes at a rather weird time. There’s little question that HTC wished to lock up a partnership with Beats since of the advertising clout the brand would bring its mobile gadgets, and now Beats is looking for a way out just as HTC is attempting to use another vein of star power to rejuvenating its anemic advertising efforts. For better or even worse, the business is investing almost a billion dollars on an enormous advertising push that’ll apparently see Hollywood professional Robert Downey Jr. spout nonsensical analyses of the business’s name. I might be drifting somewhat into the realm of the hyperbolic, but HTC really can’t afford for this kooky new method not to work. Couple that with the truth that a Beats buyback would be yet another substantial signifier of lost faith in HTC and characteristics are starting to look seriously terrible.

I’ve actually connected to HTC for a discuss all this, however it’s quite late and the business has not yet responded at time of composing – I’ll update the post with a feedback if/when I get one.