San Francisco, CA, United States (4E) – Taiwanese smartphone maker HTC has declared that it’s selling its 24.84 percent stake in Beats Electronics for $265 million. Beats Electronics, of course, is the maker of popular high-end studio headphones. The company was founded by rapper Dr. Dre and music producer Jimmy Iovine.
“For HTC it puts more cash in the bank, and they need cash now that they have turned operating cash flow negative. Investors have been asking HTC to shed assets and get cash back to help them regain profitability,” Hong Kong-based analyst Jean-Louis Lafayeedney said, according to Bloomberg.
HTC started with majority stake of Beats Electronics with 51 percent, which was equivalent to $300 million. But the smartphone maker has been unable to compete against bigger players like Samsung and Apple. It currently owns only 3 percent of the global smartphone market.
Last year, its share was 5.8 percent of the smartphone market. In an effort to turn things around, HTC has signed actor Robert Downey, Jr as a brand endorser. The deal is reportedly worth $12 million for two years.
HTC was the first smartphone manufacturer that featured Google’s Android. The company’s high point was in the third quarter of 2011 when it had a 24 percent share of smartphone shipments.
Beats Electronics has a potential taker in Carlyle Group LP, which is expected to make a minority investment.