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HTC might be planning to spin off virtual reality division

htc virtual reality division spinoff rumor vive steam vr augmented ar
HTC is in a bad state, after a run of unsuccessful mobile launches, its virtual reality division appears to be the shining light that may be able to revert the company’s nosedive.

How will it do that? Well, according to a new report from the Commercial Times (via Focus Taiwan), HTC might spin off the virtual reality division into a separate company, similar to eBay and PayPal or Hewlett Packard Enterprise and HP Inc. The new entity would be wholly owned by HTC and chairwoman Cher Wang at the start.

HTC’s stock in Taiwan rose 5 percent on the news, which cites unnamed sources.

It is apparently not the first time HTC has discussed the potential of a VR spinoff, according to the same report talks started in March 2015, shortly after the unveiling of the Vive VR at Mobile World Congress, but were stalled shortly afterwards. Ex-CEO Peter Chou may have started the talks, with Wang postponing it once she returned to the company.

A separate entity has plenty of benefits, it doesn’t have the weight of a failing company keeping it down, it can achieve better results on the stock market, and it can appeal to a new set of investors that weren’t too keen on the company’s entire portfolio.

It is a major risk for HTC however, as it will most likely lower the company’s valuation, let one of the most important assets loose, and might make investors sell assets. Take eBay’s split from PayPal, for instance: It gave the payments giant new areas to tackle and more opportunities for partnership, but eBay’s stock price has been halved since the split.

If the virtual reality division is a success however, HTC’s stock price might shoot up, as long as the company keeps a controlling stake in the new entity. Yahoo is in a similar situation, with some investors only interested in the performance of Alibaba and Yahoo Japan, two of Yahoo’s largest stakes valued at more than the company’s Web business.

It is a gamble, but it is one HTC might have to take to stay alive. The mobile industry is becoming more competitive by the month, and unlike Samsung, LG, and Sony, HTC doesn’t have much else to fall back on if its mobile division fails.

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