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Jimmy Iovine, Peter Chou, and Dr. Dre
HTC is sinking, and Beats wants out

As HTC continues to sink, Beats Electronics is looking to bail and possibly search for other investors. 

The Wall Street Journal reported that Beat Electronics LLC -- the audio products company founded by rapper Dr. Dre -- wants to buy out HTC in their smartphone venture.

In August 2011, HTC acquired a majority stake at 50.1 percent in Beats Electronics for $300 million USD. The venture aimed to help HTC gain market share from Samsung and Apple smartphones, and help Beats enter the smartphone market. 

However, in mid-2012, HTC was forced to sell back half of its stake in Beats due to a huge decline in revenue and profits. This resulted in a net loss of $4.8 million for HTC.

Today, things don't look much better for the Taiwanese gadget maker. According to The Wall Street Journal, HTC's sales have fallen below $4 billion since Q4 2011. The company also predicts its first operating loss this quarter. 

For Q2 2013, which was reported last month, HTC took in $70.7 billion TWD ($2.35 billion USD) for the quarter -- which fell below analyst expectations of $72.8 billion TWD ($2.42 billion USD). Profit was at $1.25 billion TWD ($41.5 million USD), which fell short of the $2.17 billion TWD ($72 million USD) analysts expected

Recognizing that HTC is a sinking ship, Beats is reportedly looking for a buyout and may look for other investors so that it can keep its foot in the smartphone market. 

There's no word on whether HTC is willing to sell the rest of its stake, but HTC may want to hold onto Beats, as this is one of its draws in smartphone sales. 

HTC has tried to turn its business around with the release of new smartphones like the HTC One, which grabbed 5 million sales in its first month of availability despite issues. It's even planning a 5.9-inch HTC One Max.

Last month, HTC went through an executive shake up in hopes of making a fix, where President of Global Sales Jason Mackenzie was chosen to lead HTC America, and President of North America Mike Woodward was chosen to lead Emerging Devices, a new business unit that will focus on innovative new HTC products and global distribution strategies.

Source: The Wall Street Journal





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