Struggling HTC Starts To Bail Out Of Beats Audio

HTC has started to bail out of Beats Audio only months after acquiring a 51% stake in the Company for $300M. The backflip comes as HTC struggles to stay competitive.SmartHouse has been told there was conflict between Beats Audio and HTC’s Taiwanese management, yet despite this HTC will still have exclusive smartphone rights to Beats Audio technology.

In Australia, Beats headphones and related audio products which are distributed by Convoy are one of the hottest categories at Harvey Norman and JB Hi Fi.

Following their acquisition of 51% of Beats Audio, HTC Australia were quickly launching smartphones featuring Beats Audio technology.

In December HTC in partnership with Vodafone launched the HTC Sensation with Beats headphones in Australia, shortly afterwards the free headphones disappeared to be replaced as an optional extra.

Why the mobile manufacturer decided to stop bundling headphones has not been explained.

Last week Beats Audio purchased some of its shares back from HTC with the Company now planning to expand their product range in markets like Australia.

Beats Electronics acquired online music service MOG which is sold by Telstra in Australia.

The celebrity-backed headphone company, which was co-founded by rapper and producer Dr. Dre, Interscope Geffen, A&M Records chairman and American Idol advisor Jimmy Lovine, has not said why they moved so quickly to buy back shares in their Company.

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Beats purchased 25% of the total shares that were with HTC for $150 million which is the same price HTC paid for the shares.

Beats Audio claim that they now have more flexibility to go global, something which they claim it couldn’t do with HTC.

They claim that the buyback move as a “realignment” effort, however it looks like more of a transition towards independence.

Recently HTC said that they expect that its second quarter net profit will drop by 57 percent to $247.7 million in the June quarter, less than half what it earned in the same period a year prior. The number is  significantly below what market analysts expected.

The Taiwanese handset maker blamed poor economic conditions in Europe, according to Reuters, for its disappointing sales. In addition, HTC saw some of its phones held up by U.S. Customs after Apple was awarded an injunction for patent infringement.