It has been reported in the Wall Street Journal today that Beats Electronics LLC are hoping to buy back shares from HTC, who currently own a 25% stake in the company. The company are known for their popular ‘Beats by Dr Dre’ headphones, as well as the in-built equalizer software featured on HTC’s smartphones in recent years. Beats have seen ‘explosive’ growth in sales over the past year, with revenue of $1 billion compared with $200 million in 2010.
Beats was co-founded by music industry veteran Jimmy Iovine (who is also CEO) and rapper/producer Andre Young
(better known as Dr Dre), who together own 75% of the Beats
Electronics. Just two years ago the pair sold a 50.1% stake in the
company to HTC, before buying back 25% a year later for half the price.
After HTC gained a share in beats they began to incorporate its audio
software into its smartphones, as well as bundling some models with
Beats earphones. HTC further embedded their relationship with Beats by
giving the company a $225 million loan last year.
Unfortunately for HTC, the intervening years have not proven fruitful
for the company, with their share price having dropped by 90% since
April 2011. HTC have failed to compete effectively with other smartphone
manufacturers such as Samsung and Apple, despite being in second place
in the market several years ago behind the iPhone manufacturers.
Earlier this year the company launched their new flagship phone, the
HTC One, to rave reviews in the technology community. However, despite
decent sales it has continued to under perform next to competitors such
as Samsung’s Galaxy S 4.
HTC had sought to use the Beats software, headphones and branding to
help them corner the youth market. However, differences in strategy have
reportedly soured their relationship. Beats are also rumoured to be on
the brink of expanding the company’s product line beyond headphones
including speakers, car audio systems and even a streaming music
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Source - http://thejournalist.ie/technology-2/technology-beats-by-dr-dre-looking-to-end-htc-partnership/