HTC to book loss of $40 million US with OnLive
Financial news for HTC continues to get worse with the company now chalking up another $40m (US) loss. From underperforming on smartphone sales to “restructuring” its investment in Beats audio, HTC is not having a good time of it. The hit this time comes from the cloud gaming service OnLive.
HTC’s hope, was that cloud gaming could help bring high end games to those without the beefy hardware to pull it off. Other big players such as AT&T, Autodesk and Warner Bros also had a stake. OnLive almost went bankrupt due to the huge investment it needed to make on infrastructure to power their gaming service.
OnLive, in the absence of any real revenue stream (customers) and a failure to secure more capital, has been forced to sell to a new owner. None of this is good news for HTC, at one time they were the darling of the smartphone industry, on the back of that HTC spend over $700 million on acquisitions. Along with their more recent loss in Beats audio, questions are now being raised as to their investment strategy. In particular, how many of these investments lack “synergy” with their core business in Smartphones.
HTC is obviously keen on absorbing technologies and companies that will help the company compete more effectively with companies like Samsung. They have invested $300 million into the graphics company S3, some say to help protect them from patents issues. It looks to us like HTC has made some serious mis-steps with their investments.
Instead of giving them an edge competing with manufacturing giants like Samsung they have further weakened their financial portfolio. HTC is up against stiff competition with Android handsets as well as the Windows Phone units. Unlike Samsung for instance HTC doesn't produce all the components for their phones, that’s a serious disadvantage.
A weaker fiscal position could severely affect HTCs ability to develop world-class smartphones. Here at WPCentral we certainly hope they can pull themselves out of this and get some cracking Windows Phone 8 devices out there.