The writing was on the wall. It was bound to happen. HTC has sold its remaining stake in Beats Electronics for $265 million. This is likely nothing more than a desperate bid to improve the battered phone maker’s cash balances.
According to Bloomberg, the deal is expected to close in the fourth quarter. By selling beck the 24.84 percent stake in Beats, HTC stands to gain a NT$2.52 billion ($85 million) pretax profit. Beats will also repay a $150 million promissory note, plus accrued interest.
Word of this deal started circulating in August. Since HTC bought into the hot audio brand in 2011, the phone maker’s stock price plummeted 90 percent on the back poor sales. The stock price almost hit an eight-year low this month.
HTC originally purchased 50.1 of Beats in 2011, but sold half of that stack in mid-2012, which reportedly resulted in a net loss of about $4.8 million for the Taiwanese gadget maker.
As of right now, HTC is a perilous situation. The company’s sales revenue is down, profits are down, operating cash flow is now negative and more than a few pundits have already written the company off (or are close to doing it). Worse yet, the HTC One is nearly universally praised as the best Android phone available, yet the sales numbers do not reflect the title. They built the phone everyone wanted, yet can’t get anyone to buy it.
By selling back its remaining portion of Beats, the company bought a little more time out of the deadpool.
HTC Corp closed down 2.99% on the day, ending at NT$130 on the Taiwan Stock Exchange.
