Apple Inc. and Samsung Electronics have both reaped the top spot as smartphone manufacturers. At this moment, the public is waiting for HTC Corp. on what actions it will take in order to get closer to the two companies. HTC has been retreating from Apple and Samsung, with the lowest quarterly profit reported in April. It was the lowest ever since the company ventured to smartphone manufacturing six years earlier.
However, according to reports from Barclays, HTC reported at the end of last year total cash amounting to $3 billion and the previous 70 percent payout ratio declined to 55 percent in the previous year. This could mean HTC is making cutbacks for M&A opportunities.
To this point, the approach of HTC has been to make little purchases because it strives to turn into an entertainment company. On the other hand, the company also took a huge action through a 51 percent investment in Beats Electronics LLC, the company responsible for Dr. Dre’s headphones, for US $300 million in the previous year.
Its purpose was to improve the sound technology of HTC and also to improve its status as a competitor against Apple and Samsung. Last year, the total acquisitions of HTC reached more than $700 million. This year, HTC’s approach to make acquisitions paused, probably because it is incorporating the acquisitions to the company, and is planning to change their approach after a few low sales figures.
According to an interview by Peter Chou, the chief executive of HTC, the company is not acquiring huge businesses in order to expand their business as well. HTC is trying to take advantage of the available technology from other businesses to improve user experience and to offer a unique experience. Their objective is to incorporate those technologies into their business.
However, investors are still curious how it will turn into a realistic approach to rival against Apple and Samsung.