People preview video games at the OnLive booth at E3 in Los Angeles (Photo : Reuters)
The restructuring of game streaming service OnLive, once a promising contender in the gaming market, has cost handset manufacturing giant HTC $40 million in investment loss.
By using the Assignment for the Benefit of Creditors (ABC) process, OnLive was able to sell its assets to a newly formed company, backed by Gary Lauder of the investor Lauder Partners. As a result, the company's stock was devalued, but it retained the ability to continue offering its services. OnLive isn't dead, but it was in a critical state before Lauder Partners stepped into the picture. Lauder first invested in OnLive in 2009.
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When OnLive announced its plan to file for the ABC on Friday, half of the staff was laid off. The half that wasn't "re-hired" by the newly-formed company was offered the possibility of new stock and the ability to consult for OnLive.
The company expressed that "Almost half of OnLive's staff were offered employment at their current salaries in the new company," and that "upon closing additional funding, the company plans to hire more staff, both former OnLive employees as well as new employees." In short, all is not lost.
With the formation of the new company, still titled OnLive, employee equity was done away with. According to AllThingsD, investors lost around $56 million. Specifically, HTC took a large hit.
"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 $40 million provision for this investment loss," HTC said in a statement.
HTC is currently the largest smartphone vendor in the U.S.
One of HTC's most recent phones is the HTC One X, which will be receiving an update for Android 4.1 Jellybean at an unannounced date. The phone received a warm critical reception, with Techradar stating that "It's stylishly designed, light, has a cracking screen and comes with enough future-proofing to make us believe our grandchildren may still have one."
The only glaring problem that the reviewer had with the phone was its questionable battery life.
While OnLive's restructuring was not a fatal blow to HTC, it is likely to put a dent in their quarterly earnings.