HTC loses $40m in OnLive 'restructuring'

HTC loses $40m in OnLive 'restructuring'

Summary: OnLive's long-serving employees weren't the only ones to see their equity in the firm wiped out in its surprise rejigging - investor HTC also says it will have to book a $40m loss

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TOPICS: Cloud
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HTC will have to book a $40m (£25m) loss due to its investment in the cloud gaming service OnLive, the Taiwanese handset-maker said on Monday.

Although it also has a sideline in hosted desktop delivery, OnLive is best-known for providing on-demand gaming through the cloud, allowing PC-quality games to be delivered to devices such as tablets and even smartphones.

OnLive
OnLive has a sideline in a hosted Windows desktop service for iPad and Android users. Image credit: OnLive

HTC bought into OnLive in February 2011, but now OnLive has applied for what it called 'asset restructuring', shortly after key competitor Gaikai got bought by Sony for $380m.

"Due to lack of operating cash and an inability to raise new capital, OnLive had completed asset restructuring over the weekend. HTC estimates that it will need to recognize a $40m [£25m] provision for this investment loss," an HTC statement read.

OnLive's restructuring has proven somewhat contentious, as it effectively destroyed the equity held in the company by long-serving employees and investors — including HTC.

The cloud gaming service was not the only iffy investment made by HTC in recent times. Last year it also ploughed $300m into the headphones outfit Beats Electronics, only to sell back half of that stake this July.

Topic: Cloud

David Meyer

About David Meyer

David Meyer is a freelance technology journalist. He fell into journalism when he realised his musical career wouldn't pay the bills. David's main focus is on communications, as well as internet technologies, regulation and mobile devices.

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2 comments
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  • Gaming a expensive niche

    I think gaming is a expensive niche to spend a lot of money on. Nobody really wants to pay what it costs to be profitable. This is another example of failed streaming services because of profitability.
    jscott418-22447200638980614791982928182376
  • Legal, but is it Ethical?

    So investors like HTC and employees who had stock options are SOL, but the creditors get their money. I wonder how many pennies on the dollar the creditors actually get. So much for rewarding company loyalty. This whole thing just makes me sick.
    swattz101