Beats Electronics Plans to End HTC Partnership

Dr. Dre

Dr. Dre

Beats reportedly wants an investor with more money. HTC the Taiwanese manufacturer is apparently set for a permanent split from audio company Beats by Dr. Dre, in which it acquired a 50.1% stake for US$300 million in August 2011.

HTC was expecting to integrate the Dr. Dre headphones and audio system into its phones and raise its profile in the U.S. market. In 2010 HTC had relinquished the top spot in the U.S. to Samsung Electronics Co. and Apple Inc. Now Beats Electronics LLC is looking to buy itself back from HTC, having already regained a 25% stake last year.

All of HTC’s top of the line smartphones come with Beats technology, which asserts it enhances the sound they offer.  HTC placed a Beats Audio logo on the back of its phones. At the beginning of the partnership HTC even bundled in Beats By Dre headphones with its handsets, although HTC hasn’t managed to ride the surging success of Beats to profitability in its smartphone business.

According to the report, Beats By Dr. Dre is looking to expand further into the speaker market and is also interested in launching its own music streaming service.

HTC has been in pretty consistent decline over the last few years. The company’s quarterly sales have dropped below the US$4 billion mark since the fourth quarter of 2011.Dwindling profits and an increasingly small slice of the global smartphone market, means that it’s probably not a brand that one of the world’s most successful rappers wants to be associated with, that’s despite producing some of the best kit around, with the gorgeous HTC One and One Mini among the very best smart phones on the market. HTC’s buying spree also has generated negative feedback from the investment community The Taiwanese company flagged earlier that it may post its first-ever operating loss in the current quarter.

“If deals are of no more strategic benefits, the best option is to part ways with them,” said KGI Securities analyst Richard Ko, while declining to comment on any specific HTC deal.

While Beats is now a billion dollar company and apparently lays claim to around 59% of the US market, Beats’ revenues hit around $1 billion last year. According to reports the company was at under $200 million in 2010.

While the split is unconfirmed at this stage, but given the partnership’s mixed results an eventual breakup would not be all that surprising.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

United to recall furloughed employees as travel recovers

United to recall furloughed employees as travel recovers

The fading of the pandemic and the rollout of vaccines has brought in some good cheer for the floundering air travel industry. More countries have opened up for business and are al
5 hours ago
UK’s Sanne agrees to consider Cinven bid

UK’s Sanne agrees to consider Cinven bid

Sanne, a UK fund administration business that provides alternative asset and corporate services, has agreed to hold talks with private equity firm Cinven over a potential £1.4bn t
16 hours ago
Global stocks rise as investors ignore inflations indicators

Global stocks rise as investors ignore inflations indicators

Global stocks rose to an all-time high, with investor showing confidence in a strong economic recovery from coronavirus and the vaccine effect, but the market is still a bit cautio
16 hours ago
UK watchdog whacks Amazon with probe for unfair data collection practices

UK watchdog whacks Amazon with probe for unfair data collection practices

The Competition and Markets Authority will focus on whether Amazon, Inc. favors merchants that use its delivery services.
3 days ago
Altice buys 12 percent stake in BT worth £2 billion

Altice buys 12 percent stake in BT worth £2 billion

Altice said it did not intend to make a bid for the British Telecoms company, though the takeover code also does not allow it to make an unsolicited buyout offer for six months wit
3 days ago
G7 countries agree on broad principles of minimum corporate tax deal

G7 countries agree on broad principles of minimum corporate tax deal

The world’s richest nations (G7) reached a landmark accord setting a global minimum corporate tax rate for multinationals. Would it be effective in tackling tax evasion and avoid
3 days ago