Following the news of the expected third quarter loss for HTC, analysts are now saying that the most viable solution for the trouble Taiwanese company is to merge with someone else. More specifically, they’re looking across the shores to China.
In an effort to “inject cash” back into HTC, JP Morgan analyst Alvin Kwock says that a “merger with a company like Huawei could be a solution.” The companies are definitely taking very different trajectories at the moment with Huawei on a meteoric rise and HTC on a slowly pitiful decline. I remember when HTC was the go-to company if you wanted a Windows Mobile smartphone, but times have changed and HTC has had a hard time keeping up with the Samsungs and Apples of the world.
Macquarie offers a similar line of thought, saying that Lenovo Group could be a potential partner for HTC. Remember that while Lenovo does sell smartphones in its home market of China, it is having a tough time getting into international markets. HTC is already everywhere, so that could be the perfect marriage too. A deal with either Huawei or Lenovo would certainly help HTC achieve better economies of scale, while the Chinese companies would benefit from HTC’s stronger branding.
Of course, there are all kinds of politics involved here and just because the deal could make sense doesn’t mean that it will happen. Naturally, HTC, Lenovo and Huawei have all declined to comment on potential partnerships and mergers.