Sign in with
Sign up | Sign in

Beats Wants to Buy Back HTC's Stake

By - Source: Beats | B 14 comments

Beats is looking to buy HTC's remaining share in the company and seek another investor.

Back in August of 2011, HTC poured $300 million into a deal with Beats Electronics, manufacturer of the hugely popular 'Beats by Dre' audio equipment. However, just two years on, it looks like Beats is ready to kick HTC to the curb. The company sold half of its 50 percent stake back to beats in July of 2012. Now, the Wall Street Journal is reporting that Beats is looking to buy out HTC's remaining stake in favor of a new investor that's willing to put up the funds for growth.

The newspaper cites people familiar with the matter that say Beats hopes to buy out HTC's 25 percent stake and the company is in talks with an investor that could provide debt financing and potentially take a minority stake in the company. Though neither party has confirmed any of the rumors, it would seem the partnership Beats CEO Jimmy Iovine once described as "an opportunity for two world-class companies to redefine the smartphone industry and define the future," is on the verge of collapse.

When HTC sold half of its share in Beats back to the company, the company said the "realignment" of the agreement would "allow Beats more flexibility for global expansion while maintaining HTC's major stake and commercial exclusivity in mobile." Indeed, part of the $300 deal was that HTC had exclusive rights to manufacture smartphones with Beats audio. No doubt if Beats succeeds in buying HTC out, that will change pretty quickly.

Beats was launched in 2009 as part of an effort to improve the quality of audio products being sold today. Iovine, also the CEO of Interscope Geffen A&M Records, said in 2009 that the record industry had allowed music to be degraded and that Beats hoped to change that. "It's one thing to let it get stolen," he told CNet. "It's another to allow it to be degraded because then you really don't have a chance...video games and TV quality are getting better and the quality of our work is getting lower. If that happens, then music will become disposable."

Display 14 Comments.
This thread is closed for comments
  • 5 Hide
    sykozis , August 19, 2013 5:38 PM
    By the time "Beats Audio" is done with the music industry, they won't have anything to worry about because there won't be a music industry left.
  • 7 Hide
    Shin-san , August 19, 2013 5:55 PM
    Beats screwed over Monster, and now HTC
  • 9 Hide
    nebun , August 19, 2013 6:02 PM
    I don't see why people buy this...overpriced and heavy crap
  • 1 Hide
    g-unit1111 , August 19, 2013 8:40 PM
    Monster sounds like a company you wouldn't want to do business with. I love my HTC One, it's one of the best phones I've ever had.
  • 4 Hide
    teh_chem , August 19, 2013 9:03 PM
    Seeing if I'm getting this straight... 2 years ago, HTC poured $300M of liquid cash into Beats in the form of a 50% stake in the company. Usually the company would take that money and use it to expand their business. Now Beats is either upset that HTC sold half their stake in the company, or otherwise is upset that HTC is not supplying even more capital to help Beats further expand. Isn't 2 years of working with $300M enough time to expand? HTC didn't post a stellar performance over the past year, with their profits down 80% from where they were a year ago. It's very reasonable to re-examine a cash-heavy investment like Beats, and figure out potentially better things to be doing with your money; especially if your profits are down that much.

    I can't say I've ever listened to a set of beats speakers or headphones. But something about them makes me think that they can't possibly be worth $300 for a pair of headphones, any more than a $30 set of headphones.
  • 1 Hide
    hp79 , August 19, 2013 9:06 PM
    I thought Beats was just a gimmick, and most products with Beats are just for branding, but on HTC One it really helps boosting internal speakers.

    I see other manufactures adding audio enhancement on their line too. For example, I also have a Lenovo X230T which has Dolby enhancement, and it really helps enhance the internal speaker sound quality. That being said, I don't need Beats, as long as some kind of enhancement is done.

    I would never buy a headphone though. That is overpriced. LOL
  • 0 Hide
    southernshark , August 19, 2013 9:18 PM
    Hopefully Google is their next partner because the sound on the Nexus 4 is absolute crap.
  • 4 Hide
    acadia11 , August 19, 2013 11:04 PM
    Beats are base heavy garbage a true audiophile laughs at beats along with bose, put on some siesenhauser or shure phones and see what real quality ear and headphones sound like.
  • 1 Hide
    martel80 , August 20, 2013 1:02 AM
    Beats headphones have terrible price-to-performance ratio. There are headphones that cost 1/3rd and perform better. People must be crazy to waste money just for the beats logo.
  • 1 Hide
    Vorador2 , August 20, 2013 1:04 AM
    "Beats was launched in 2009 as part of an effort to improve the quality of audio products being sold today."

    I cannot express how ironically amusing this sentence is to me.
  • 0 Hide
    rantoc , August 20, 2013 5:50 AM
    Indeed, part of the $300 deal was that HTC had exclusive rights to manufacture smartphones with Beats audio.

    So Beats cant afford the final 150$ to but them out, seems like Beats business is indeed good =D. (Yupp - Should be millions but seems the editor missed that, and when proofreading seems to be non existent here nowadays....).
  • 0 Hide
    d_kuhn , August 20, 2013 6:05 AM
    They may not be good audio tech... but Beats has done a great job of marketing. I see them as a low end Bose... a lot of hype allowing them to get a higher price for their product than they normally would based on performance (not something that's going to make them popular around here... but I'm sure Wall Street loves them).
  • 0 Hide
    warezme , August 20, 2013 6:55 AM
    Beats audio is no more than an audio algorithm wrapped inside a brand. It is no different than what Creative Labs does with their brand except they weren't smart enough to target the hip crowd. There was a time you would purchase a laptop that was sold as having a Creative Labs audio when in fact there was no Creative Labs coprocessor. It was all an audio algorithm running on software via your main CPU. After lots of people complained the option quietly went away. I was one who complained and forced Dell to send me a hardware solution for false advertising. At least Beats is forced to have some built in processor to do the algorithms but it isn't magic or expensive. On cell phone like the One, (which I own), the processing would be trivial and even cheaper.
  • 0 Hide
    ddpruitt , August 20, 2013 8:10 AM
    Beats is the Monster Cable of the audio world, all flash no substance.