maandag 19 augustus 2013

Beats by Dr Dre wants to buy out HTC as it seeks to expand its business; photo Djamila Celina Melcherts by Bonno van der Putten

Beats by Dr Dre wants to buy out HTC as it seeks to expand its business; photo Djamila Celina Melcherts The founders of Beats Electronics are music mogul Jimmy Iovine and American hip-hop producer and artist Andre Young, better known as Dr. Dre, are looking to expand the business into speakers, audio systems in cars, consumer electronics and online streaming music services. Beats Electronics is now in talks with an investor that could help finance its plans and maybe take a minority ownership stake in the coming weeks. Beats has notched explosive growth lately; Dr. Dre controls about 75% of the company. Beats' revenue shot up to roughly $1 billion last year from less than $200 million in 2010. Beats sold its first pair of headphones in 2008 for $350 apiece and benefited from the growth of smartphones and tablets and popularized premium headphones partly of this by making them a fashion statement and partly by touting their sound quality as superior to that of the tiny white "earbuds", earbuds have long been a hallmark of Apple iPod and iPhone lines Beats is estimated to have captured 59% of the U.S. market for premium headphones. That market, which includes all headphones and earphones costing at least $99, increased by 18% last year. However, that growth will slow, and a big challenge for Beats will be establishing itself as an audio brand beyond headphones. Earlier this year, Beats unsuccessfully tried to raise $700 million from the credit markets to refinance debt and buy out HTC's stake. The big Q for investors of course was if Beats' success in the headphone market was merely trendy or something that could be sustained or replicated in other areas. HTC incorporated audio software from Beats into a line of phones, and other phones were bundled with Beats headphones. HTC last year also provided Beats with a one-year, $225 million loan that was secured by all of Beats' assets That loan was recently replaced with an interim loan that is due in July 2014. HTC's fortunes faded amid tougher competition in the smartphone market from companies like Samsung. HTC's shares have lost nearly 90% of their value since April 2011, when HTC was second only to Apple in U.S. smartphone sales. While HTC originally saw Beats as a way to court the youth market, the collaboration ended up souring with differences in opinion on strategy

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