HTC reevaluating S3 purchase after ITC reversal

Posted:
in iPhone edited January 2014
HTC is having second thoughts about its decision to purchase S3 Graphics now that the U.S. International Trade Commission has dismissed S3's patent infringement complaint against Apple.



The Taiwanese handset maker said in a statement on Wednesday that it will conduct a "holistic re-evaluation of the S3 Graphics acquisition" in light of the case dismissal, Paid Content reports. HTC also said it was "disappointed at the outcome" of the recent ITC ruling.



The ITC formally dismissed S3's complaint on Monday, overturning a July ruling that had found Apple's Mac products had infringed on the graphics firm's patents.



HTC acquired S3 earlier this year for $300 million in hopes of gaining a valuable bargaining chip in its ongoing dispute with Apple. Chief Executive Peter Chou has since worked to reassure investors that the value of the S3 Graphics purchase will exceed its high price.



S3 Graphics intends to appeal the decision. It also filed a second complaint against Apple with the ITC in September, alleging infringement of two more of its patents.



But, time is running out for HTC to strike a deal with its rival, as the ITC is scheduled to rule on Apple's case against HTC on Dec. 6. In July, an Administrative Law Judge with the commission found HTC guilty of infringing on two of Apple's patents.



Apple first sued HTC in March 2010, accusing the company of stealing its technology. According to his authorized biography, Steve Jobs was livid at the release of an HTC phone in January 2010 that appeared to infringe Apple's iPhone patents.



"I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong," Jobs reportedly told biographer Walter Isaacson. "I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this."



HTC spooked investors on Thursday when it slashed its revenue forecast, predicting zero growth year over year for the fourth quarter, down from original estimates of 20 percent to 30 percent growth. The company's shares fell as much as 7 percent on the news.



"This new guidance takes us by complete surprise and is at odds with recent discussions we have had with distribution channels, especially in Europe," Sanford C. Bernstein senior analyst Pierre Ferragu told Reuters.



HTC's full statement is reproduced below:

HTC is disappointed at the outcome of the recent ITC ruling that stated Apple did not infringe S3 Graphics? patents. S3 Graphics will continue to appeal. HTC has made significant effort in preparing for these complicated legal proceedings, including a complete legal investigation and comprehensive report on patent and price evaluations. HTC had decided to acquire S3 Graphics based on the strong belief that evidences of patent infringement from Apple were clear and ITC ruled in its initial determination that Apple had infringed two patents from S3. In light of recent development, HTC will work closely in good faith with VIA Technologies and WTI Investment International to conduct [a] holistic re-evaluation of the S3 Graphics acquisition.
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Comments

  • Reply 1 of 58
    So to sum up:

    They tried to buy a legal victory because they don't have any real innovation to stand on, got called on their bluff, and are running away with their tails between their legs.
  • Reply 2 of 58
    hill60hill60 Posts: 6,989member
    If you want to play with the high rollers, the cost of chips is mighty high.



    In the words of Don Schlitz, "You gotta know when to hold 'em, you gotta know when to fold 'em".
  • Reply 3 of 58
    jfanningjfanning Posts: 3,385member
    Quote:
    Originally Posted by hill60 View Post


    If you want to play with the high rollers, the cost of chips is mighty high.



    In the words of Willy Nelson, "You gotta know when to hold 'em, you gotta know when to fold 'em".



    Do they not have a music section in the K-Mart you work for? It wasn't Willy that said that...
  • Reply 4 of 58
    Dr. Dre just got a strange chill.
  • Reply 5 of 58
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by jfanning View Post


    Do they not have a music section in the K-Mart you work for? It wasn't Willy that said that...



    Heh no one said that, but people love misquoting lyrics as well as misattributing them.



    Kenny Rogers
  • Reply 6 of 58
    Quote:
    Originally Posted by jfanning View Post


    Do they not have a music section in the K-Mart you work for? It wasn't Willy that said that...



    The music section at Kmart is still laregly filled by 8-tracks. \
  • Reply 7 of 58
    I laughed pretty hard when I read this story earlier.



    HTC CEO: What? Really?! Oh, forget it then.



    lol!
  • Reply 8 of 58
    chris_cachris_ca Posts: 2,543member
    Quote:

    HTC had decided to acquire S3 Graphics based on the strong belief that evidences of patent infringement from Apple were clear and ITC ruled in its initial determination that Apple had infringed two patents from S3.



    So HTC didn't purchase S3 because they made good products and they would enhance HTC's own products?

    They only purchased based on the belief they could screw Apple?
  • Reply 9 of 58
    Quote:
    Originally Posted by hittrj01 View Post


    So to sum up:

    They tried to buy a legal victory because they don't have any real innovation to stand on, got called on their bluff, and are running away with their tails between their legs.



    The problem for Htc is Apple has patents that were granted long before Htc even existed.



    No new company can enter the smartphone market and even attempt to innovate because companies like Microsoft, Apple and IBM own patents fundamental to all operating systems. The only way is to have your own portfolio of patents and cross license which rules out most new companies. The patent system is broken and it stops innovation.
  • Reply 10 of 58
    Quote:
    Originally Posted by Chris_CA View Post


    So HTC didn't purchase S3 because they made good products and they would enhance HTC's own products?

    They only purchased based on the belief they could screw Apple?



    Well, yeah. That's as plain as it gets. I mean, is S3 Graphics chips aren't even products that HTC could use directly in their smartphones, and they don't plan to.
  • Reply 11 of 58
    Maybe HTC should patent the color white.
  • Reply 12 of 58
    Someone took blankie away
  • Reply 13 of 58
    Cost them $300 million to buy S3 and untold millions more for a legal defense, yet they only took in 624.62 million in profit last quarter, that was a new record for them. There stock has dropped by what looks about 1/3 in the last week or two.
  • Reply 14 of 58
    jd_in_sbjd_in_sb Posts: 1,484member
    Nice to see bad karma come back to haunt HTC.
  • Reply 15 of 58
    cpsrocpsro Posts: 2,452member
    Now that's buyer's remorse.



    Google next?
  • Reply 16 of 58
    Quote:
    Originally Posted by SolipsismX View Post


    Cost them $300 million to buy S3 and untold millions more for a legal defense, yet they only took in 624.62 million in profit last quarter, that was a new record for them. There stock has dropped by what looks about 1/3 in the last week or two.



    Didn't help with them also sponsoring cycling team etc. there are other ways to market product without spending huge sums of money. Check out Apple. Fanboies everywhere to defend and market products not to mention media hypes that generate interests.
  • Reply 17 of 58
    Quote:
    Originally Posted by Cpsro View Post


    Now that's buyer's remorse.



    Google next?



    No, Apple already bought NeXT
  • Reply 18 of 58
    "holistic re-evaluation" : I am impressed ...
  • Reply 19 of 58
    Quote:
    Originally Posted by Orlando View Post


    The problem for Htc is Apple has patents that were granted long before Htc even existed.



    No new company can enter the smartphone market and even attempt to innovate because companies like Microsoft, Apple and IBM own patents fundamental to all operating systems. The only way is to have your own portfolio of patents and cross license which rules out most new companies. The patent system is broken and it stops innovation.



    HTC innovates?

    HTC builds some of the most generic hardware you can imagine.

    The patent system stops leeches like HTC from stealing their way in.
  • Reply 20 of 58
    radjinradjin Posts: 165member
    Quote:
    Originally Posted by Chris_CA View Post


    So HTC didn't purchase S3 because they made good products and they would enhance HTC's own products?

    They only purchased based on the belief they could screw Apple?



    Something like Google and Motorola.
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