HTC may be acquired by Lenovo

HTC may be next among the telecom handset vendors in line for a big-ticket acquisition. If reports are to be believed, Taiwanese maker HTC is already in talks with Chinese manufacturer Lenovo either for an outright sale, or a manufacturing tie-up.

Internet media is abuzz with reports of some kind of deal brewing between Lenovo and HTC. According to Taiwanese language site AppleDailly, the two companies have been engaged in secret meetings to discuss "bilateral strategic cooperation."

HTC and Lenovo began discussing a possible deal way back in August, suggests the report. Though no details are available, it is believed the deal would leave the HTC brand intact, at least for initial few years.

Once a strong mobile phone player, HTC has faced troubled times in last one year. It posted a quarterly operating loss of $120 million in the last quarter as sales tumbled by a third from a year earlier, underscoring a dramatic decline for a company which boasts of award-winning smartphones, but has failed to develop a durable brand image and ensure strong marketing.

HTC's troubles have pushed its shares down some 55% for the year to date and sparked calls for the company to consider a radical overhaul. A JPMorgan note in July called for the company to look at merging with China's Huawei Technologies. However, Huawei has since said that it is not planning to acquire another smartphone-maker to grow its market share.

Incidentally, Lenovo has been trying to make inroads into the growing smartphone market. There were also rumours of the company buying the beleaguered smartphone maker BlackBerry.

In August, Lenovo reported a net profit of $174 million. The world's largest PC maker sold more smartphones than PCs for the first time in the company's history during the quarter. The strong sales propelled Lenovo to its fourth place in the global smartphone market, behind Samsung, Apple, and LG.

The company's strong sales in China, where it is the No. 2 smartphone maker, helped it strengthen its position. The top five global smartphone vendors in the second quarter according to IDC rankings were: Samsung with a 30.4 percent market share; Apple with 13.1%; LG Electronics with 5.1% ; Lenovo with 4.7% and ZTE with 4.2%.

Last month, Lenovo added a "premium" device to its smartphone lineup in it bid to broadens its challenge to market leaders Samsung Electronics Apple.