With each day, speculation is mounting that Taiwanese smartphone manufacturer, HTC might be taken over by another company in the industry. While its share prices are pretty low right now, it may not be a good deal for anyone to acquire it considering its falling market share and uncertain future outlook. According to analysts, there is a possibility that manufacturers such as ZTE and Lenovo might be interested in the company as they are both looking to invest in high end smartphones and gain a stronghold outside China. This is especially true for Lenovo which can expand its product base with the high end smartphones that HTC already has.
The major USP of HTC is that it is present in most of the major markets of the world and network providers are quite comfortable with the company and its devices. In addition, with the shares being cheap and as they are trading at 8 times more than forecasted earnings in 2012, the company is quite a tempting takeover target. The company’s share fell nearly 50% this year and is far cheaper than its competitors such as Apple which is trading at 9 times the forecasted amount. However, the fact that HTC almost exclusively makes Android phones is not a good bet as a phone that is popular in one year might be obsolete the next in the fast paced smartphone market.
The key to being successful in the smartphone market, according to experts is access to intellectual property. When Google acquired Motorola Mobility for $12.5 billion, it got access to over 17000 patents. Google can use these to develop new devices and platforms and even license them out as a profitable venture. On the other hand, HTC merely has 1700 odd patents. Potential buyers of the company could be from the telecom, personal computer or electronics sector but the fact remains that merger deals in similar companies do not have a good record. The perfect examples are the dissolution of Sony Ericsson recently and the fact that Google is going to have to lay off 4000 Motorola Mobility employees.
Meanwhile HTC has shifted its focus to China and India where the high end smartphone market is still untouched. It is unlikely that this will turn around the company’s fortunes but just might stabilize it enough to allow for a competitive takeover.
