HTC boosts patents with S3 Graphics deal

But HTC CEO Peter Chou dismisses concerns that such disputes will have any long-term effect on the company, arguing that investors and analysts misunderstand the situation. “Patent lawsuits haven’t caused any actual damage to HTC,” he says.

“Only the street is worried for us, we’re not worried ourselves. We hope the disputes will get more reasonable in the future.”

It has not been a good year for HTC, the world’s fifth-largest smartphone vendor, which had been building strong brand value in high-end smartphones.

Battling to regain market share from Apple and Samsung Electronics, the former contract phone maker suffered a rapid fall from grace in the second half of last year after its phones failed to keep pace with rival iPhones and the Galaxy range.

Last Wednesday, HTC warned of lower revenue for this quarter, citing lower than expected sales to Europe and delayed product sales in the US. It cut revenue targets twice in the fourth quarter.

HTC shares have slumped 72% in the past 14 months, and this week touched their lowest in more than 26 months. The company’s market value has dropped to below $10bn.

Over the same period, Apple shares have gained 65% and Samsung 42%.

HTC’s decision to buy S3 Graphics, which has fought and lost its own complaint against Apple, was announced last July; analysts said HTC had either lost interest in the $300m purchase after the International Trade Commission ruled against S3 in November, or it was employing a negotiating tactic.

With the deal now complete, analysts agree S3’s payments will be useful to HTC, but say they will offer only limited respite. While Apple’s main target is Google, which provides the operating system that powers most of the smartphones sold by HTC, Samsung and others, HTC is by no means safe.

The patent dispute is only part of HTC’s problems.

Although its high-end One series launched in February won praise and some market share, this has had a lot to do with its timing — a few weeks before Samsung’s flagship Galaxy S3 and with no new iPhone models due out until later in the year. Reuters