HTC ponders S3 purchase following ITC decision

TAIWANESE PHONE MAKER HTC is re-evaluating its decision to buy graphics outfit S3 in the wake of its failure to win a recent US International Trade Commission (ITC) case against Apple.

HTC had announced it would purchase S3 Graphics in a bid to bolster its intellectual property portfolio as it fends off lawsuits from Apple. However following the ITC decision that Apple did not infringe S3's patents, HTC will stop and rethink its decision to buy the company.

HTC issued a statement in which it claimed the firm had "made significant effort in preparing for these complicated legal proceedings, including a complete legal investigation and comprehensive report on patent and price evaluations". Given S3's ITC defeat it could well be that HTC wants to revalue S3.

According to HTC the deal with S3 could still be on, but the company didn't do much to hide its disappointment with the ITC decision.

"HTC had decided to acquire S3 Graphics based on the strong belief that evidences of patent infringement from Apple were clear and ITC ruled in its initial determination that Apple had infringed two patents from S3. In light of recent development, HTC will work closely in good faith with VIA Technologies and WTI Investment International to conduct holistic re-evaluation of the S3 Graphics acquisition."

In further bad news, HTC said it expects to flog fewer than expected handsets in the fourth quarter. HTC blamed the global economy and market competition for revising its fourth quarter forecast down to match the same period in 2010.

The fact that S3's patents didn't stand up to the ITC investigation could well render the firm useless for HTC's purposes. It could also cause S3's sale value to plummet. µ