Google to Acquire HTC’s Mobile Phone Business

Alphabet Inc.’s Google, an American search giant, is reportedly set to buy the smartphone business of HTC, a Taiwan-based consumer electronics maker, leaving it to mainly focus on its Vive VR helmet.

According to a report from HTC’s homeland, the two firms are in the final stages of acquisition deal. Moreover, it was said that Google’s interest in HTC was ignited by the Silicon Valley giant’s desire to “perfect the integration of software, content, hardware, network, cloud, AI, and lastly, the HTC’s poor financial situation. It was also said that Google is keen to make a “strategic investment” or “buy HTC’s smartphone R&D team.”

The amount of the said acquisition was not disclosed.

The acquisition comes after news in late August said that HTC, once one of the most popular smartphone makers in the United States, was open to the idea of selling all or parts of its operation. Those plans were said to be driven by decreasing smartphone sales, following unproductive product lunches, and a hard start for the company’s newer virtual reality headset business.

In 2011, Google bought Motorola for $12.5 billion in an effort  to ramp up its hardware ambitions. It released a few handsets while operating as a Google subsidiary, but none of them worked successfully.

The reason why the deal would mark a U-turn to a serious hardware player for Google, three years after it sold its Motorola Mobility to Lenovo Group Ltd. for $2.9 billion. And as Google invests more in building its own devices, like the Pixel phone, owning a smartphone subsidiary could help it support a stronger challenge to Apple’s iPhone.

Pixel’s huge marketing budget suggests that Google wants to become a tier-one phone vendor, according to report, which described it as a “strategic investment.”

This week, HTC, which gives market guidance monthly, said that August was 54.4% down on a year ago, and the lowest since 2004. Consolidated sales for the year to date were decreased, 14.4% on last year, despite a well-received flagship, the HTC U11.

HTC actually helped the search giant and that makes it knowledgeable with the Google smartphone domain due to the launch of Google Pixel. That means HTC could be a good fit for Google as it continues to cater to consumers with its Pixel smartphone brand.

Worryingly, Googles’s move is like of Microsoft’s purchase of Nokia’s phone division in 2013.

Analyst Eric J. Sheridan believes that Google’s potential acquisition of HTC offers several advantages. He claimed that a deal to acquire HTC would be “immaterial to Alphabet” given its $95 billion cash stash and offer a number of interesting benefits.

Meanwhile, by 10:17 AM GMT -4, Alphabet Inc. (Google) traded 0.38%, or 3.65, to $946.24. It opened at $949.70, with a session high of $950.70, and a session low of $945.16. Its market capitalization was $649.49 billion, with a P/E ratio of 34.26.

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