During the ASUS annual shareholder meeting, Asustek Chairman Johnny Shih revealed that the company has had internal discussions regarding an ASUS acquisition of HTC. Chief Financial Officer David Chang clarified the Chairman’s comments to Reuters by stating that the topic had been discussed, but an actual takeover of HTC was not very likely due to Asustek’s organic growth market strategy.
“Our chairman has chatted about the topic internally. Still, the chances of an actual takeover are not big as Asustek is a company that has depended on organic growth.” David Chang
When we reached out to HTC for their reaction to the comments made by Asustek executives, they replied with the following statement.
“We don’t comment on rumour or speculation. As an international brand, HTC will continue to design world-class innovative smart devices through its pursuit of brilliance brand promise.”
Last week, we speculated that HTC may become a takeover target by other players in the technology sector if the company’s stock continues on its current downward trend. HTC stock price dropped nearly 20% in the first two days of this week, but appears to have reached a stabilization level over the past three days. HTC’s low stock price has reduced the company’s market capitalization to roughly $2 billion US dollars.
We reached out to HTC this morning
Asustek hasn’t been a huge player in the smartphone market, but it has seen dramatic growth over the past two years. In 2013, ASUS reported selling only 400,000 smartphones, but that number rose dramatically in 2014 to 8.5 million units. The company is expecting smartphone shipments for the first half of 2015 to reach 7.8 million units is 2015 full-year numbers to peak between 17 and 25 million units. All of Asustek’s Zenfone smartphones run on Intel Atom chips, but the company has used Qualcomm chips in its Padfone hybrid lineup.
Looking at the number, it’s hard to see why ASUS would want to buy HTC. While the company’s smartphone sales have grown exponentially over the past few years, ASUS has struggled to gain market share and brand recognition in Europe and North America. ASUS is the third largest computer manufacturer in the worlds, but many see the company as a discount brand which produced medium to low quality products – a dramatic difference from HTC’s premium smartphone lineup. If ASUS does choose to buy HTC, the acquisition would give ASUS a highly recognized and respected brand in Europe and North America with an award-winning product team – similar to how things are playing out with Lenovo’s acquisition of Motorola. Add in HTC’s new PC-centric HTC Vive virtual reality venture and it looks like ASUS and HTC is a match made in heaven.
I would suggest that NVIDIA buy HTC. (wishful thinking on my behalf)
While NVIDIA’s market cap is much higher that HTC’s at the moment, HTC is in much better shape. NVIDIA has not turned a profit in the past two years, reporting nearly half a billion dollars in losses. The only way NVIDIA would be able to buy HTC is with a pure stock trade.
I am looking from the consumer point of view. I was thinking about a HTCShield Phone. Waterproof and a lot of internal memory. To use my phone to stream whatever game, movie, or music or photo I have. No matter if the game is a android game or pc game. And I do not know if HTC has patents that NVIDIA can use to make it more worth while to even consider to do a take over?
Nick do you think that the investments made into the Re Cam, Re Grip and Re Vive could be playing a role in respect of the lower profits.
Any new product development does impact profitability if the product does not sell well. The. HTC Re has not been a massive success and we are still waiting for the HTC Grip and HTC Vive to hit the market.
That being said, the Vive is being made in partnership with Valve so HTC isn’t bearing the full brunt of development costs. Same goes for the HTC Grip. HTC also revealed that they expect non-smartphone products to account for 10% of the company’s revenue by the end of next year.
By sticking to smart phones, HTCs profits for 2015 could be a little better, but that does not mean it would be the right long term decision for the company.
Asus is Mercedes in computer parts for years.
On another hand not easy for organic grow for anyone. Cards are on table. What happened with amazone phone.
Didnt see even one in wild.
There’s no way that Asus is seen as a “discount” brand for computers. Sounds like somebody is getting that mixed up with Acer. Asus would actually be a good fit for HTC – they’re like the embodiment of what HTC want to be. They don’t promote themselves like HP for mass production – they make quality products. I’m not sure if there’s a more respected laptop brand on the market.
Question would be whether, with unit sales going up so quickly, would they want to potentially dilute that market momentum by acquiring HTC? Theoretically they take the HTC quality and use the greater development fund at their disposal and become a major player very quickly. Reality is that it rarely works that way.