HTC Stock Trading to Halt Sept. 21 as Google Acquisition Rumors Swirl

HTC stock sales on the Taiwan exchange will be halted due to a "material release of information," which could involve rumored news of a purchase by Google.

HTC Google Buyout Rumors

HTC stock and securities sales will be temporarily halted on Sept. 21 on the Taiwan Stock Exchange just before the company unveils as-yet undisclosed "material information" which could be related to a rumored pending acquisition of HTC by Google.

The cryptic disclosure was made in a Sept. 20 announcement on the Taiwan Stock Exchange, but gave no further details about why the stock sales are being halted. "The company will apply for resumption of trading after the release of material information," the statement continued.

HTC's investor's webpage also included a similarly cryptic note on Sept. 20, regarding a China Times report about a potential sale of the company to Google. "HTC might announce the sale to Google?" the note states. "HTC does not comment on market rumor or speculation," the note continued.

A Wall Street Journal report on Sept. 20 says such a deal is imminent and could be announced soon, based on information from sources who are familiar with the talks. Under the deal terms, Google would buy HTC's mobile-phone original design operations, the sources told the Journal.

HTC, the makers of smartphones and the popular Vive VR line of virtual reality products, has previously manufactured Google's Pixel and Pixel XL smartphone models, which established an on-going relationship between the companies.

Google did not immediately respond to a request from eWEEK for comment on the situation.

What makes the potential deal interesting is that Google previously acquired a smartphone line, mobile technology patents as well as other products from Motorola Mobility in May of 2012 for $12.5 billion. It sold the phone business to Lenovo in January 2014 for about $2.91 billion, less than two years later.

That sale by Google was seen as a move for the company to solidify its strategy in the mobile space and cut its losses as it continued to focus on the Android mobile operating system. Google had sold off other parts of Motorola Mobility for more cash within months after it acquired the company in early 2012.

So why might Google be interested in buying another smartphone maker now?

"Google's hardware efforts are in a very different place today from where they were when they sold Motorola to Lenovo," Jan Dawson, chief analyst at Jackdaw Research, said. "They're far more serious about them and I'd argue they’re far more central to their vision for their future than they were back then."

By pursuing HTC, Google "makes perfect sense to try to acquire some low-priced assets from a company that's always made really good phones, including Pixel phones," said Dawson. "This could certainly accelerate Google's ability to make its own hardware significantly and with that capability to really improve its integration and optimization efforts, something that Apple has long had as a huge advantage over Android smartphone vendors."

Charles King, principal analyst at Pund-IT, said an HTC purchase by Google "would place the company at the forefront of hardware development and production for mobile and other devices based on its Android operating system, along with potential implications for Chrome."

Google could also be interested in HTC's Vive mobile-based AI platform as well, he said, because it is complementary to Google's efforts in VR. "For HTC, a deal would qualify as an exceptional lifeline given the company's ongoing financial challenges."

An HTC buyout "should offer Google the means to more fully control the ecosystem for its hardware," said King. "A deal would also take HTC off the table in case any Google competitors were interested in acquiring it, an act that would be highly disruptive for Google" if it had occurred.

An ongoing challenge for Google is the widespread fragmentation of the Android ecosystem and market "with some vendors approaching software updates and security issues in, at best, a lackadaisical fashion," said King. "Buying HTC would enable Google to more effectively set the bar for appropriate Android device quality and behavior, a point that's likely to become critically important as mobile devices increasingly become the targets and vectors for hackers and security exploits."

Brian Blau, an analyst with Gartner, told eWEEK that HTC's attention to detail in device construction could certainly benefit Google. "Having HTC in-house means Google can showcase great smartphone technology, and ultimately that is what Google is after [because] they need great devices in their ecosystem."

Another analyst, Avi Greengart of GlobalData, however, said that he's not so confident that both parties would come out well in such a potential deal. "If Google buys HTC, it will be a lifeline to HTC, and a risky move for Google" because HTC had a tough time making enough Pixel phones for Google when the devices were launched.

"Google heavily advertised the Pixel, then badly struggled to meet demand for months after it was introduced," said Greengart. "The Pixel's components are not particularly unique, and HTC's inability to build enough of them is a red flag that buying the company may not resolve.”