HTC “reevaluates” S3 buy after Apple loss, slashes Q4 forecasts

Nov 23, 2011
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HTC is considering scuppering its $300m S3 Graphics acquisition after the company's patent portfolio failed to beat Apple in a recent IP trial, it has been confirmed. HTC "will reevaluate its planned purchase" the company said in a statement today, Bloomberg reports, after the US International Trade Commission overturned a preliminary ruling in HTC's favor against Apple.

That original ruling, back in July, found that Apple's OS X platform infringed on several patents that HTC would acquire as part of its acquisition of S3 Graphics. However, the USITC decided that Apple was in fact guilty of "no violation" of the IP, and terminated its investigation altogether.

HTC's CFO, Winston Yung, said at the time that "here are many [patents] that are very strong … we think the acquisition is justified because of all the patents" while the company's general counsel Grace Lei confirmed that an appeal was being considered.

Nonetheless, HTC has slashed its revenue forecast by up to 23-percent, predicting Q4 revenue unchanged from the same period a year ago, at around NT$104bn ($3.4bn); last month, revenues of as much as NT$135bn had been estimated. Quarter-on-quarter sales are expected to slow, with growth not expected until the first half of 2012. HTC says that "due to global macroeconomic downturn and market competition, the assumptions of 2011 Q4 financial forecast provided earlier are no longer applicable" though doesn't call out the USITC decision specifically.


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