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HTC sells 100% stake in Saffron for US$47 million

2013/09/05 11:34:27

Taipei, Sept. 5 (CNA) Taiwan-based HTC Corp. has agreed to sell its 100 percent stake in London-based digital content provider Saffron Digital for US$47 million amid drooping sales, the handset maker said late Wednesday.

HTC said it reached the deal with CDMG Holdings UK Limited, a subsidiary of the Toronto-based Cinram Group, which is one of the world's largest providers of media development and delivery services.

CDMG will pay US$7.5 million in cash with a purchaser note in the amount of US$39.5 million, based on a five-year term and 6 percent interest rate per annum.

The disposal of HTC's stake in Saffron comes as the company is predicted to miss its financial forecast for the third quarter on falling monthly sales.

The Taoyuan-based company reported consolidated sales of NT$13.2 billion in August, down 16 percent from a month ago and down 45 percent from a year earlier.

HTC said the transaction is "in alignment with its strategic planning and asset allocation," and will produce a

profit of NT$156.94 million (US$5.29 million) for the beleaguered smartphone company, it said in a filing to the Taiwan Stock Exchange.

After the sale, HTC will retain permanent royalty-free rights to Saffron's intellectual property to continue digital media services on its devices, including the HTC Watch, it said.

At its peak in February 2011, HTC announced its strategic investment in Saffron as a platform to offer more services to handset customers.

Saffron distributes DRM (digital rights management)-encrypted media products to Nokia, Sony Ericsson, HTC, LG and Samsung, and has service contracts with Sony Pictures, NBC Universal, Paramount, 20th Century Fox, Sky, T-Mobile and Vodafone.

HTC's August sales figures dropped to the second-lowest this year and marked the third consecutive decline since monthly sales peaked in May at NT$29 billion, signaling a weakening demand for the company's high-end phones and a lag in its mid-range phones.

(By Jeffrey Wu)
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