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Smartphone maker HTC is said to explore strategic options

A staff clears the logo of HTC at its store, in Taipei, Taiwan August 1, 2017. REUTERS

[NEW YORK] HTC, the beleaguered manufacturer that once ranked among the world's top smartphone makers, is exploring options that could range from separating its virtual-reality business to a full sale of the company, according to people familiar with the matter.

The Taiwanese firm is working with an adviser as it considers bringing in a strategic investor, selling its Vive virtual reality headset business or spinning off the unit, the people said, asking not to be identified because the discussions are private.

A full sale of HTC, which has businesses ranging from VR to handset manufacturing, is less likely because it isn't an obvious fit for a single acquirer, one of the people said. 

Shares of HTC jumped as much as 8.5 per cent in Friday trading, hitting the highest level in three weeks. They were up 6.6 per cent at 9.09am in Taipei, giving HTC a market capitalisation of US$1.9 billion.

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Before the move, the company had shed about 75 per cent of its value over the past five years as its smartphone market share dipped below two per cent.

No final decisions have been made, and HTC may choose not to proceed with any strategic changes, the people said. A representative for HTC declined to comment.

The Taoyuan City-based firm has been attempting to refocus its growth prospects on the high-end VR business, with shipments of the Vive headset totaling more than 190,000 units in the first quarter, according to research firm IDC. HTC also has a contract manufacturing deal to assemble Google's Pixel handset.

"It's a cutthroat Android smartphone market out there," Ramon Llamas, IDC's research manager for wearables and mobile phones, said in an interview, referring to the mobile operating system developed by Google.

"Apple and Samsung have made it hard for HTC to stay at the top of the market, and Chinese phone makers have made it hard for HTC to dominate the middle and low end of the market," Mr Llamas said.

Vive is a "different beast" from Facebook's Oculus VR and Sony Interactive Entertainment LLC's PlayStation VR, Mr Llamas said.

"I am not seeing other companies really making that play, competing in that same area," he said.

Founded in 1997, HTC began as a contract manufacturer. In 2002, it won a deal with Microsoft to make Windows-based phones and quickly became one of the top producers globally. It also made the first Android phone in 2008.