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Beats Wants to Buy Back HTC's Stake

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."

  • sykozis
    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.
    Reply
  • Shin-san
    Beats screwed over Monster, and now HTC
    Reply
  • nebun
    I don't see why people buy this...overpriced and heavy crap
    Reply
  • g-unit1111
    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.
    Reply
  • teh_chem
    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.
    Reply
  • hp79
    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
    Reply
  • southernshark
    Hopefully Google is their next partner because the sound on the Nexus 4 is absolute crap.
    Reply
  • acadia11
    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.
    Reply
  • martel80
    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.
    Reply
  • Vorador2
    "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.
    Reply