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Beats Audio looking to drop HTC instead of hot beats

News by Andrew Kameka on Monday August 19, 2013.

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Beats Audio, purveyors of the ubiquitous flashy headphones and audio technology branding in other electronics, is reportedly looking to end its partnership with HTC. The Wall Street Journal reports that Beats co-founders Jimmy Iovine and Dr. Dre want to raise money in order to buy out HTC's stake in the company and expand its business into speakers and car audio systems. Beats and HTC refused to comment for the story, but the Journal cites sources that say that Beats is seeking investors so that it can spend the money to expand into more product areas, something it cannot get from HTC.

HTC and Beats first joined forces in August 2011 when HTC was just starting to see its share of the Android smartphone market start to slip to Samsung. HTC invested $300 million for 50 percent of the company and mobile exclusivity of Beats Audio, but it later sold back 25 percent to Beats for $150 million. Iovine and Dr. Dre now wish to purchase the remaining stake and take on new investors. The duo tried to raise $700 million to refinance its debt but a deal never materialized because of credit fears and concerns about rules set by the Federal Reserve.

If Beats were to buy back its stake from HTC, consumers likely wouldn't notice a difference at first. HTC retained mobile exclusivity of the Beats brand when it sold back 25 percent of the company last year. Any deal would likely include HTC continuing to be the only smartphone company with the rights to use the equalizer and audio driver settings for Beats. It could also inject some cash into HTC's pockets as the company's profits continue to dwindle.

source: Wall Street Journal

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Andrew Kameka
Andrew is based in Miami, Florida.

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