Lenovo in takeover talks with HTC

by CXOtoday News Desk    Oct 10, 2013

lenovohtc

The tech industry can look forward to another big acquisition to happen soon. This time, between Lenovo and HTC. The latest report from Taiwan’s Apple Daily suggests Lenovo is already in talks with HTC to discuss the terms of a possible acquisition deal which is likely to be completed in the first half of 2014.

HTC: A bleak future

Once a strong player, Taiwan-based HTC had been in trouble this year and was going through patent infringements, top management exit and internal turmoil and other uncertainties that resulted in massive loss in its market share in the first quarter of this financial year. HTC has not been able to match the product and marketing techniques to that of Apple and Samsung and its problems have only increased by supply chain constraints.

The company posted an operating loss of Taiwanese-$3.5 billion in sales for the quarter tumbled by a third from the same period last year. The losses were more than what analysts expected and they predicted that the company’s immediate future looked bleak.

Analysts believe the only option left for the company would be to get acquired. HTC will join the league of other struggling companies in the sector including Nokia and BlackBerry who were also going through uncertain futures.

There were reports that other Chinese vendors, Huawei and ZTE were also looking at taking over HTC to leverage the $4.2 billion brand prowess in the mobile devices segment and finally, Lenovo got the possible deal.

A gain for Lenovo

It must be noted that Lenovo had been trying to make inroads into the growing mobile market. There were also reports of the company possible buyout of smartphone maker BlackBerry which did not work out in the end. In August, Lenovo reported a net profit of $174 million. It was interesting to note that the PC maker sold more smartphones than PCs for the first time in the company’s history in the first quarter. It also occupied the fourth place in the global smartphone market, behind Samsung, Apple, and LG.

As far its smartphone strategies are concerned, a senior spokesperson of Lenovo said the company will differentiate itself through design, functionality and features to strike back in the aggressive world of smartphones. In September this year, Lenovo added a “premium” device to its smartphone portfolio to expand its relevance in the mobile phone market and challenge market leaders such as Samsung and Apple.