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HTC selling Beats shares back to Dr Dre

Just a year after inking a deal to acquire 50.1 per cent of Beats Audio, HTC is selling the shares back to Beats, offloading 25 per cent of its stake.

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Joseph Hanlon Special to CNET News
Joe capitalises on a life-long love of blinking lights and upbeat MIDI soundtracks covering the latest developments in smartphones and tablet computers. When not ruining his eyesight staring at small screens, Joe ruins his eyesight playing video games and watching movies.
Joseph Hanlon
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Just a year after inking a deal to acquire 50.1 per cent of Beats Audio, HTC is selling the shares back to Beats, offloading 25 per cent of its stake.

The Sensation XL with its bundled Beats headphones.(Credit: HTC)

HTC has stated that the reason for its sale is to "provide Beats with operational flexibility for global expansion", according to CNET. In the last 12 months, HTC has incorporated Beats Audio software into the majority of its latest smartphone releases, and has bundled headphones with handsets since the end of 2011, including the Sensation XE and Sensation XL.

There is no word yet on how this shifting of shares will impact Beats branding and integration within HTC products going forward, though it is unlikely that we'll see high-quality Beats headphones in the box with new phones. In April, an HTC product executive alluded to how unsuccessful this experiment has been for the company, telling CNET, "an accessory like the headphone doesn't factor in when someone is buying a smartphone".

This news follows a difficult time for HTC financially, with some market analysts estimating that the company may have lost as much as a quarter of its smartphone market share between the beginning of 2011 and the first quarter of this year. Beats is doing better, with a strong share of the premium headphone segment, and a recent acquisition of US-based streaming-music service MOG — a service which launched recently in Australia in partnership with Telstra.