Google mulls buying Taiwan mobile device vendor HTC

Google was reported to be eyeing HTC’s smartphone business, as the troubled device vendor saw a massive drop in sales for August 2017.

According to reports originating in the Taiwanese press, the search giant is eyeing HTC’s smartphone unit, but not its Vive VR business. It is not clear if the deal will also include the ailing Taiwanese vendor’s smartphone intellectual property, although the original report referenced Google taking on HTC’s R&D activities.

Discussions are said to be in late stages, with a deal expected to be announced by the end of the year.

Of course, this is not the first time Google would have acquired a smartphone maker: it owned Motorola Mobility for a while, before selling it to Lenovo. But it never made much of the acquired business, leaving it largely to stand alone.

However, since then Google increased its involvement in the hardware space, for example with its Pixel devices. It also worked closely with HTC on such products, meaning cementing the relationship may make some sense.

But Financial Times cited Yuanta Securities analyst Jeff Pu, who said HTC had already lost “elite engineers” to rivals including Huawei, Lenovo and Asus, and those who remain “shouldn’t be too hard to poach away” – putting the value of a deal into question.

Revenue slump
Google’s timing may be good, however, with HTC’s share price trending downward on the back of continued poor performances. This week, the company reported its lowest monthly sales since 2004.

It took the unusual step of stating “monthly revenue does not necessarily represent quarterly trends” – monthly sales figures normally pass without comment.

August 2017 revenue of TWD3 billion ($100 million) was down 54.4 per cent year-on-year from TWD6.58 billion. It was also down 51.6 per cent from July 2017.

According to Focus Taiwan, the drop was attributed to slowing sales of HTC’s flagship U11 smartphone – hardly a good sign at this stage in the device’s lifecycle.

Reports late last month suggested HTC was looking at spinning-out its Vive VR unit, in order to raise some more cash. A full sale of HTC was seen as less likely, due to the lack of a single potential buyer for both its smartphone and VR units.

While Vive has generated a fair share of the headlines, HTC’s smartphone unit still makes up the lion’s share of the business – albeit much diminished from its glory days.

Also, Vive itself is not immune from the effects of competition.