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of Chairwoman Cher Wang. None of that has worked, and shareholders aren’t happy. Investors saw HTC as a global player in 2011, when the company’s sales topped $4.6 billion a quarter. It was briefly No. 1 in the U.S. back then but no longer ranks among most researchers’ top 10. Over the past four years its market valuation has fallen by 95 percent (60 percent this year) as Apple, Samsung, and cheaper Chinese competitors have grabbed share. On Aug. 10, a further plunge left HTC’s value at $1.5 billion, slightly below the amount of cash it has on hand— meaning investors are saying its brand, facilities, and designs are worthless. “Cash is the only asset of value. You can’t really assess any value on the rest of the company,” says Calvin Huang, an analyst at SinoPac Financial Holdings. “HTC’s climb to the top made management too confident, with its ego leading to a string of mistakes in product design, marketing, pricing, and distribution.” Wang said in a statement on Aug. 13 that the phone maker seeks to cut its staff of more than 15,000 by about 15 percent. She said the layoffs are part of HTC’s plan to lower expenses by 35 percent and focus more on high-end phones and other hardware, such as the cameras and VR equipment. In an internal e-mail reviewed by Bloomberg and confirmed by the company, Wang said the plan “will deliver HTC to a world leading position in each of our chosen businesses.” She added: “Be assured that I have full confidence that HTC will prosper again.” HTC is betting that a commitment to pricier phones such as those in its One line—well-received by reviewers but mostly ignored by customers—will encourage partnerships with wellknown companies in other industries. The phone maker is working with video game developer Valve on its VR project
HTC’s Long Fall $9b
Market value Shares are trading at a value below cash on hand
$4.5b Cash at the end of each quarter $0 7/31/2012
8/14/2015
and inked a deal with Under Armour last year to make fitness bands that carry the sportswear label’s brand. Were HTC to shift toward cheaper models, “I don’t think Under Armour would work with us,” Chief Financial Officer Chang Chialin said at a press briefing on Aug. 6. “Their strategy is not very clear,” says Richard Ko, an analyst for KGI Securities. “VR is very cool, but it’s a niche product, which I don’t see contributing to sales in the next 12 months.” So far, none of HTC’s plans looks like a turnaround, Ko says. If sales grow, or at least stop falling, the planned 35 percent cuts might help HTC break even. Without them, he estimates, HTC will be out of cash within three years. Says Ko: “They have to stop the bleeding.” —Tim Culpan The bottom line HTC is counting on high-end smartphones and cost-cutting to help make up for its dwindling market share.
Video
HBO, Netflix, and Amazon Want Your Kids Sesame Street has become a new front in the streaming wars Children’s content is “a critical glue” to Netflix’s library
When HBO decided to take the Internet seriously by launching standalone streaming service HBO Now, it was just a matter of time before the network went looking for kids’ shows. Its Aug. 13 deal with Sesame Workshop, for the right to put the next five seasons of Sesame Street on its cable channel and streaming services, shows just how important children have become to video providers as declining subscriptions in conventional pay TV start to reshape the industry. (PBS will be able to air the episodes after nine months.) The next day, Amazon.com and Netflix released new cartoons aimed at preschoolers. Amazon premiered Wishenpoof!, about a young girl with magic powers,
and Netflix debuted Dinotrux, which is exactly what it sounds like. These aren’t either company’s first forays into kids’ programming: As of October, about a quarter of TV shows available on Amazon, and a sixth of those on Netflix, were aimed at children, estimates researcher SNL Kagan. In July, Amazon released six pilots with names like Lily the Unicorn and Bear in Underwear. Netflix, which in 2011 separated kids’ programming from the rest of its catalog, will get new Disney movies as soon as they leave theaters starting next year. Dinotrux is the first new property to emerge from a deal with DreamWorks Animation for 300 hours of original programming, including established studio franchises as well as shows with fresh characters. Streaming services are far easier for viewers to cancel and resubscribe to than cable TV, so the goal is to make that decision harder for parents, says Rich Greenfield, an analyst at BTIG. “Remember when Netflix launched House of Cards, dropping all episodes at once, and investors feared consumers would sign up for three days, binge the entire series, and then disconnect?” Greenfield says. “Netflix combated this risk by adding a significant amount of content” to its overall lineup, helping it to target “all members of the family, with children’s content a critical glue to its offering.” Netflix declined to comment for this story; Amazon didn’t respond to requests for comment. HBO didn’t have to worry much about using kids’ shows to retain customers until recently. Its streaming service doesn’t even include Fraggle Rock, the children’s show that shares lineage with Sesame Street and premiered on the network in the 1980s (rival services carry the
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Technology
