HTC sells factory to fund its VR operations

HTC sells factory to fund its VR operations
The HTC Vive VR headset got off to a good start for the company when 140,000 units sold in the first seven months ended last November. Each unit retails for close to $800. For all of 2016, it is estimated that 450,000 Vive units were sold, bringing in $360 million in gross revenue. While handsets still bring in the majority of HTC's cash,  last year CEO and co-founder Cher Wang said that VR is more important to HTC than its lumbering smartphone business

Even though the HTC 10 was well received, it did not sell all that well. And as gorgeous as the HTC U Ultra looks, the company simply faces too much competition when it comes to smartphones. So what do you do if you're HTC, and the device you are known for is selling like coldcakes (in other words, you're struggling) and you need to raise funds to continue expanding your promising new division. HTC could sell more shares on the Taiwan Stock Exchange. However, the stock remains near historical lows, trading at the equivalent of $2.47 a share. Selling additional shares at that price will dilute current investors, angering many of the deep pocketed funds that are holding up the price of the stock. So that is out. And selling bonds with the company in its currentl precarious position would mean paying exorbitant interest rates.

So HTC decided to raise $91 million that it could use toward its VR operations by selling a 114,000-square-meter factory in Shanghai. The plant sits on 28 acres of land. The company making the purchase is Xingbao. While the money will help, keep in mind that thanks to its beleaguered smartphone business, HTC reported an operating loss of $117 million last quarter. For all of 2016, the company had revenue equivalent to $2.44 billion. That was the lowest top-line number reported by HTC since 2005.

The transaction announced today includes some additional land along with the factory. HTC issued a release in which it said that the deal will "fulfill the company’s operational adjustment needs and assets activation." HTC confirmed that the money raised from selling the plant will be used for its "expanding VR business."

source: HTC, FocusTaiwan via AndroidAuthority

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