Could HTC merge with Huawei?


As HTC continues to battle a two-year financial slide, one analyst has suggested a merger with Huawei could be a way out for HTC. HTC and their fans had high hopes the HTC One would prove to be a product with enough popularity to at least turn the ship around financially. During the first half of 2013, HTC also started to concentrate on some unique marketing strategies, usually aimed squarely at market leader Samsung. To their credit, the HTC One is generally regarded as a premiere smartphone and has garnered extensive praise throughout the industry. Sales of the device did have a positive financial impact on HTC during the second quarter of 2013 when it was finally released, but not to the extent hoped for. Despite plans to model a sales strategy similar to many other major manufacturers, HTC sales are predicted to stay flat for the third quarter, leading some to question what other steps the company could take to prevent a complete collapse.

JP Morgan analyst Alvin Kwock, with the Asia Pacific office of JP Morgan, thinks HTC should consider a merger with Huawei. Kwock thinks such a merger would be a “game changer” as the two companies could combine their expertise in the smartphone market. HTC would bring the demand for high-end smartphones to the table and a strong, major consumer brand, items Huawei lacks. Meanwhile, Huawei has made inroads into the China market and has access to financial resources that could help HTC. HTC recently reported operating margins of only 1.5 percent for the second quarter. This small amount does not give them the room to tinker with the prices of their devices, putting them at a disadvantage when a company like Samsung starts knocking 20 percent off the prices of their competing top-tier smartphone, the Samsung Galaxy S 4. With more financial resources, HTC could continue to compete on price for a longer period of time.

According to Gartner Inc. numbers for the first quarter, HTC was the thirteenth largest mobile phone manufacturer, capturing less than 2 percent market share, while Huawei was the sixth largest grabbing just under 3 percent of the market. By combining, the new company would jump up to being the fourth largest manufacturer, skipping over LG Electronics and ZTE Corp. in the process. Only Samsung, Nokia, and Apple would hold more market share.

Do you think HTC should look at merger options as a way to escape the financial doldrums they find themselves in? Would a merger with Huawei make sense to you?

source: Taipei Times
via: Android Authority

About the Author: Jeff Causey

Raised in North Carolina, Jeff Causey is a chief financial officer and licensed CPA in Durham, North Carolina. Jeff has owned an HTC EVO, a Samsung Note II, and an LG G3 along with a Samsung Galaxy Tablet 10.1. He currently uses a Motorola Moto X Pure Edition and a Nexus 7 (2013). Recently Jeff added Google Glass to his stable of tech gadgets. Unfortunately, his wife and kids have all drunk the Apple Kool-Aid and have i-devices. Life at home often includes demonstrations of the superiority of his Android based devices. In his free time, Jeff is active in his church, a local MINI Cooper car club, and his daughter's soccer club. Jeff is married, has three kids, and a golden retriever.

  • fraserb64

    makes sense apart from the perceived security issues in the USA.
    WOuld the USA trust Huawei more if HTC were involved or would HTC lose the trust they have now?

  • Mike Paterson

    If it meant slowing Samsung down or making them more aware of the customers then I would say yes.

  • nartoab

    Its ok if they decide to keep the HTC brand for the merger, I know for sure that I wouldnt spend money on Huawei brand products

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