On Monday HTC made another announcement that is going to add to its existing woes of a falling market share and a bearish stock. The company said that it is expecting a loss of nearly $40 million on its investment in Onlive Inc, an American company that delivers on-demand games. The company is running out of cash and is now a liability for the Taiwanese smartphone manufacturer that had only recently announced some pretty bad news regarding its Q2 figures for 2012 and expected figures for the future.
In its statement HTC said that Onlive did not raise enough money to meet its operational costs and has applied for asset restructuring last week to get its figures straight. While the statement was rather vague about the problem, it appears that the company is quick running out of cash and might have to liquidate several assets to continue operations. The loss of $40 million is equivalent to the amount that HTC paid to get a stake in the company. However, it is unclear how much stake HTC holds in Onlive.
Since 2010 and 2011 HTC has been on an acquisition spree and it appears that not many of them have worked out. The company had bought a managing share in Beats Audio which manufactures premium audio hardware and products and used the services in its high end smartphones. However, in July the company sold back its share in Beats at a loss of nearly $5 million. The company stated that it wanted to offload its stake in the company to allow for unhindered audio development on Beats Audio’s end that can later be integrated into HTCs phones. In addition, in 2011 HTC acquired S3 Graphics for $300 million mainly for the patents that S3 held. They were to be used as leverage against Apple in the legal battle between the two smartphone giants. However, S3 Graphics was also up against Apple and its patents have not helped HTC so far in the court room.
Recently, the company’s shares fell to an all time low raising rumors about a possible takeover, probably by Chinese companies like Lenovo or ZTE. Its investment in Onlive adds a further liability to the company and might make it more prone for a takeover. However, there has been nothing regarding the issue from the Taiwanese company which seems intent on bouncing back.
