HTC could drop its planned purchase of S3 Graphics following the ITC ruling favoring Apple

Taiwanese handset maker HTC’s lawsuit against Apple over infringement of S3 Graphics’ patents has suffered a fatal blow (in addition to this one) as the United States International Trade Commission (ITC), which can block the import of products, reversed its earlier decision and ruled in favor of Apple on November 21. The Commission has officially ended its investigation of the case and HTC shares fell 4.9 percent on the news.

And now, Bloomberg reports that HTC “will reevaluate” its planned purchase of S3 Graphics following the ITC ruling.

HTC Corp. will reevaluate its planned purchase of S3 Graphics Co. after the target company lost a U.S. International Trade Commission ruling it brought against Apple Inc. over patent infringement, the Taoyuan, Taiwan-based company said in a statement today.

Just yesterday, HTC’s general counsel Grace Lei told DigiTimes yesterday his company “will consider an appeal”. But after closer inspection of the ITC ruling, the company clearly concluded the best course of action is to consider dropping the $300 million acquisition of graphics maker S3 Graphics announced back in June, which only proves this acquisition may have been planned as a leverage in HTC’s other legal dealings with the iPhone maker.

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HTC shares bleed red amid import ban fears

Shares of the Taiwanese Android phone maker HTC fell 6.5 percent this morning following the ruling by the International Trade Commission (ITC) that the company violated two patents held by Apple. The company’s shares had been pretty much in a free-fall throughout last week as well. The agency’s commissioners still have to support the ruling, but investors are already panicking over fears that the ruling will favor Apple. This, in turn, would open doors to ITC’s ban on imports of HTC’s phones into the United States. In response to the crisis, HTC announced a share buy back program worth up to $760 million in an attempt to stabilize its share price and restore investor confidence, reports Financial Times:

The attempt to prop up HTC’s share price appeared to have little effect as the stock fell below HTC’s minimum purchase price of T$900 to close down 3.9 per cent at T$871. The sell-off highlights investor fears that the legal battle could have wider implications for the competitive balance between Apple and Google Android-based phonemakers like HTC, Samsung and Motorola.

HTC is thought to have recently acquired S3 Graphics for $300 million in a bid to secure a stronger ground in its legal dealings with Apple, which filed its patent infringement complaint against the Taiwanese company back in March 2010. That’s not all HTC’s been doing lately in order to buy its way out of this mess…

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HTC’s backup plan vs Apple: Its S3 acquisition

Yesterday’s victory in the ITC courts may have seemed like good news for Apple in giving it the upper hand against its Android carrying foe.  But, even if the ITC courts hold up the ruling on Apple’s two broad ranging patents from the mid-90s,

..it likely won’t be able to stop HTC from selling its popular Android line in the US.  HTC has a recently acquired ‘Ace in the Hole’… Read more