HTC is considering selling off its remaining stake in the popular high-end headphone maker Beats Electronics LLC, the move acts as a bit of a white flag for HTC, admitting that its acquisition of the company hasn't generated enough revenue or momentum for either company.
The Wall Street Journal reports the Beats co-founders, Jimmy Lovine and Dr. Dre, want to raise enough money to buy out HTC's remaining stake in the company and expand its business into speakers and car audio systems rather than be tethered to the struggling smartphone maker.
HTC acquired a 50.1 percent stake in the company for $300 million in August of 2011. The company hoped its new partnership with the popular Beats by Dre headphones would increase its reputation in the U.S. HTC lost the top smartphone spot to Samsung and Apple in 2010. Since that time, HTC sold back half of its stake in Beats Electronics in July of 2012, losing about $5 million.
The Taiwanese smartphone company's quarterly sales have dropped below $4 billion since the fourth quarter of 2011. That number is not on the rise, which is causing Beats Electronics to want to jump ship from HTC as soon as it can.
"I haven't seen much synergy from the cooperation," BNP Paribas analyst Laura Chen said. Via the Wall Street Journal. "Beats has an advanced audio system and design, but it turned out having that in HTC phones didn't help sales in a meaningful way."
Despite the potential for being bought out, MobileBurn points out that Beats likely won't create a boon for any other smartphone company if it is successful in breaking away. As stated, it plans to go into high-end speakers and car audio systems, not simply stay in smartphones. Also, when HTC sold half its stake in July 2012 it retained exclusivity of the headphones. Any buyout deal reached would continue the exclusivity agreement for a little while longer.
