HTC invests $35.4M in Magnet Systems, loses $40M in OnLive deal
HTC is acquiring a 17.1 percent stake in mobile enterprise apps platform Magnet Systems valued at $35.4 million. The announcement follows hours after HTC revealed it will suffer a $40 million loss on its investment in cloud gaming service OnLive.
The Magnet Systems platform combines mobile, social and cloud technologies designed to simplify the development of business applications. Its SalesWin app for Apple's (NASDAQ:AAPL) iOS and Google's (NASDAQ:GOOG) Android enables sales professionals to remotely access information related to customer projects, also recommending new opportunities based on historical data and suggesting workflow efficiencies. HTC said the Magnet Systems investment will expand the social and cloud capabilities available to its mobile enterprise customers.
The Taiwanese handset maker also confirmed it will be forced to recognize a $40 million provision for its investment in OnLive, which in late 2011 launched streaming game services optimized for devices including smartphones and tablets. Faced with a shortage of operating cash and stymied in its attempts to raise new capital, OnLive laid off more than half of its employees late last week and announced Sunday that its assets were acquired by a new, unnamed company backed by venture capital firm Lauder Partners. The firm will continue under the OnLive brand, promising no interruptions to its services and applications.
OnLive serves more than 2.5 million subscribers worldwide. Its free streaming app, available for download from the Google Play storefront, includes hits like L.A. Noire, Batman: Arkham City, Defense Grid Gold, Dirt 3, Split Second and Darksiders. All titles are optimized for touch-enabled gaming and available for instant play via both Wi-Fi and mobile networks in the United States and the United Kingdom, leveraging 4G LTE technologies to deliver low-latency gaming experiences. The OnLive revenue model is based on sales of its OnLive Wireless Controller unit, which connects to tablets, smartphones, PCs, Macs and TVs; the controller retails for $49.99.
The OnLive loss casts new doubts on HTC's investment strategy. Less than a year after purchasing a 50.1 percent majority stake in audio technology firm Beats Electronics for $309 million, HTC sold back 25 percent to Beats' founders last month for $150 million. HTC remains Beats' largest shareholder with 25.1 percent, with producer/Interscope-Geffen-A&M chairman Jimmy Iovine and hip-hop icon Dr. Dre--who founded the company in 2006--now controlling the remainder. HTC added it will continue working with Beats to develop audio experiences optimized for mobile devices, and it will retain exclusive mobile rights over those technologies. In a separate statement, HTC said it will lend Beats $224.9 million for one year.
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