HTC losing money on investments but still spending
Disruptive Taiwanese device manufacturer HTC said this week it expects to chalk up a loss of $40m through the investment it made in cloud-based gaming platform OnLive, which it bought into in early 2011.
“Due to lack of operating cash and an inability to raise new capital, OnLive had completed asset restructuring over the weekend. HTC estimates that it will need to recognize a $40m [£25m] provision for this investment loss,” HTC said in a statement.
When integrated fully, the OnLive service will enable customers to pipe the service through the tablet’s broadband wireless to their television sets, or let them play directly on the tablet, however the business is burning through cash at a rapid rate.
The news follows HTC’s recent sale of half of its 50.1 per cent stake in headphone maker Dr Dre’s Beats Electronics, less than a year after purchase, costing the firm $4.8m. Revenues for the Taiwanese firm dropped more than a quarter on a year on year basis for the three months to end-June, and HTC warned that they may fall yet further during the third quarter.
This hasn’t stopped the company spending. In an announcement made Monday, HTC revealed it is it planning to acquire 17.1 per cent of US software developer Magnet Systems for $35.4m to extend its software applications for mobile devices in the enterprise space.