Analysts yesterday gave the thumbs-up to HTC Corp’s (宏達電) purchase of a majority stake in Beats Electronics LLC, saying this would give its brand the “youth” oomph factor it needed and allow it to reach the music-savvy crowd.
“Overall, this is an interesting deal from a brand building point of view ... This is indeed a well thought-out acquisition in synergy,” JPMorgan analysts Alvin Kwock (郭彥麟) and Ashish Gupta said in a report issued yesterday.
“HTC has been largely regarded as a ‘tech geek brand’ and -apparently Beats touches the hearts of youngsters aged 18 to 35, thanks to cheap viral marketing by Hollywood or sports stars,” they said.
Photo: CNA
Brand power is becoming increasingly important as commoditization is inevitable over the longer term, and that explains why HTC has opted for acquisition over licensing, according to the report.
HTC announced on Thursday it planned to pay about US$309 million for a 51 percent stake in Beats Electronics, a US venture involving superstar music producer Dr Dre, Interscope Records and Interscope chairman Jimmy Iovine.
Bank of America Merrill Lynch was also positive about the investment.
The acquisition will help HTC deliver a studio-quality audio experience, broaden its audience base and aid its transition from a technology brand to a lifestyle brand, Merrill Lynch analyst Robert Cheng (鄭勝榮) said in a report.
Founded by Jimmy Iovine and Dr Dre in 2006, Beats is one of the top three high-end stereo headset makers.
Among the selling points for the headphones, which cost US$150 to US$300, is that they supposedly offer sound superior to the white “earbuds” that come with Apple Inc’s iPods and iPhones.
According to Merrill Lynch, Beats posted sales growth of 300 percent last year and 280 percent during the first half of this year.
The average selling price for Beats headsets increased from US$183 last year to US$193 now, it added.
“In terms of sales or profit contribution, we don’t believe Beats can really bring significant impact. However, if HTC can successfully build the Beats user-experience into HTC phones and sustain (or increase) its ASP [average selling price], it would come as long-tail impact,” Cheng said.
Shares of HTC dropped 3.03 percent to close at NT$800 on the Taiwan Stock Exchange yesterday.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS