New Report About VR Spin-Off Nose-Dives HTC Shares
Today, the shares of HTC on the Taipei stock exchange nose-dived; it dropped 10%, the maximum allowable in a day. This was believed to be investors’ reaction to the rumor of the split of its VR activities away from the mother company.
Investors are getting concerned that HTC might want to spin-off its promising virtual reality venture into a separate company. This is a natural reaction since investors see a promising prospect in virtual reality for the company. Creating a separate company for the VR meant killing the hope of investors.
In Taiwanese media today, there were reports that Cher Wang, one of the cofounders and the current CEO of HTC, has created a new company that will handle the development of HTC’s VR business. This news has since confirmed by HTC, stressing that its role will be to develop ordinary “new and innovative technology.”
The report shows that the new company was wholly owned by Cher Wang, with legal address on the eighth floor of HTC’s headquarters in Taipei. Cher Wang’s husband and HTC cofounder Cho Ho-tu, are among the board of directors.
This is not the first kind of such rumors about an eventual split of VR activities, but HTC has always denied it.
Obviously, HTC is fully investing in the development of VR, and its executives have affirmed that HTC has more growth potential in VR than in Smartphones. Recently, the company launched a business incubator called Vive X and promised $100 million for startups looking to develop virtual reality products. If a company that has been bleeding money for years could be interested in investing $100 million, it then shows that Vive is not just a sheer distraction, like the re-camera case.
Although the HTC’s VR prospects are rosy, it does not suggest that its Smartphone business is less of being promising. Let’s face it, HTC requires much more than a good flagship to become competitive again. The good reviews of the HTC 10 are not enough to gain investor trust. Investors’ reaction to the VR spin-off rumors by dumping HTC stock is an evidence of lack of trust in the company’s survival it separate the VR from the parent company.
This is coupled with the chilly reception the HTC 10 is reportedly facing in China. Customers are saying that HTC 10 is too expensive out of US. The phone is overpriced and not a multiband, hence, the poor success recorded.
Investor can now relax from their panic now that HTC has clear the air concerning the VR separation rumor.
What does the Future Hold
Now, the question is, would Vive be better off outside of HTC’s umbrella? This is a multi-million-dollar question that only the board of new company can answer and must answer, if Vive is going to survive in the highly prospective VR market.
No doubt, VR is a promising market. It has the potential to lift HTC up above competition. However, the company needs to come up with better strategy that guarantees supreme performance both in management and output. Vive might be a new comer in the VR industry, but HTC is a big name with global outreach enough to put the new company at top of the ladder among competition. The management of the new company will certainly apply wealth of experience from HTC to Vive.