handphone-noflash

Featured: HTC Fails at Their Financial Obligations to Beats

July 23, 2012 - Written By Christina Gardner

Back in Fall of 2011 Dr. Dre, co-founder of Beats Audio came together with HTC to incorporate Beats Audio into HTC devices. The HTC Sensation XE was the first in line to receive this technology. HTC then brought 50.1 percent of the company for $300 million.

 

As of last Saturday, HTC released in a prepared statement that they were selling half of that stake back for $150 million. Wow! According to HTC, since they had taken “majority control of the company,” they have seen shakeups in management, dwindling market share, and stock prices that are falling. However, HTC also wasn’t meeting the financial obligations of the deal it had made with Beats.

Multiple sources had claimed that this deal was decided on both sides and the best route to take. Currently, Beats Electronics owns 75% and HTC owns 25%.

Part of the statement released by HTC to provide reasoning on why they were selling was:

“…to provide Beats with operational flexibility for global expansion.”

There was no further information provided as they and Beats spokespersons declined anything further. There are speculations that Beats was heading into some trouble,  but in April, a HTC executive who had pushed for the merge was moved out as chief financial officer. There are also many speculations that the revenue that was going up, had all of sudden starting crashing down. HTC then tried to bundle Beats headphones with the HTC handsets that were being released. Unfortunately, they realized that headphones were not a factor when buying a smartphone. No one knows for sure the “behind the scenes,” but it would look like both of the companies were not a good match for each other and finding themselves on the path for trouble.

Beats is still in the market and has big plans on going forward, but for now it would seem that HTC decided the best move is to remove involvement and stay in the outskirts when it comes to Beats Audio.

 

Sources: Cnet