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Google's purchase of Motorola spinoff seen as benefiting HTC

2011/08/16 14:16:47

Taipei, Aug. 16 (CNA) HTC Corp. is expected to benefit from Google Inc.'s acquisition of Motorola Mobility Holdings Inc. (MMI), foreign brokerages said Tuesday, but the long-term outlook of the world's No. 5 smartphone maker remains uncertain.

On Monday, Google announced a plan to buy MMI for US$12.5 billion (NT$360.8 billion), saying the purchase will enable it to create a better user experience that super-charges the Android ecosystem and enhances competition in mobile computing.

MMI, maker of the Droid and Defy smartphones, completed a spinoff in January this year from parent company Motorola Inc.

"On the bright side, Google is making a strategic move to strengthen its IP portfolio and protect the Android ecosystem," analysts of Morgan Stanley said in a research note. "This might benefit HTC, which has a weaker position in IP than other main licensees."

The U.S.-based brokerage expressed concern, however, over how Google would eliminate conflicts of interests between itself and Android licensees in the future.

"We do not expect any dramatic change in the Android competitive landscape, at least in the next six to eight months, but it remains to be seen if HTC can maintain its lead over the pack and gain share," the research note said.

Morgan Stanley also said it would be worth watching HTC to see if the company begins work on a new operating system to reduce its dependence on Android and to a lesser extent the Windows platform, following a strategic alliance between Microsoft and Nokia and Google's acquisition of MMI.

Aaron Jeng, an analyst with Nomura Securities, did not expect that MMI would become a strong Android smartphone vendor or pose any threat to HTC after the acquisition.

"We think that Google will remain focused on software and will benefit from the increasing market share of Android," Jeng said. "As a result, we believe there will be no impact on HTC's current position in the Android camp."

Jeng also believed that the acquisition could possibly offset some of the market concern about a mid-July ruling in the United States, which found that HTC had infringed on two of Apple's patents.

"MMI has 17,000 patents and 7,500 patents pending. This is a very large IP portfolio, which we think should help the Android community resolve the patent battles," Jeng added.

Therefore, Nomura maintained its "buy" rating for HTC with a target price of NT$1,100.

Shares of HTC closed flat at NT$827 Tuesday.

(By Jeffrey Wu)