The Dual-Screen Smartphone is Over – Yota Devices Sells Itself in $100 Million Funding Round

yotaphoneWhen Yota Devices burst on to the international tech scene three years ago it wowed us all with a unique dual-screen smartphone that combined an LCD screen with an E-ink screen.

And now the fun ride is over. Engadget, Liliputing, Teleread, and other sites are reporting the news that Yota Devices has picked up a new investor (Edit: to be clear, Engadget does call this an acquisition).

What they got right was the fact that Hong Kong-based investment company REX Global was buying a 65% stake in Yota Devices.

What they missed is that Crunchbase describes this as a $100 million funding round, and they also missed the buy options that REX Global secured on the remaining shares of Yota Devices.

Here's the fun part of this deal: REX Global now owns two-thirds of Yota Devices, but they have also options to acquire the remaining 35% of the company from Yota's old parent company and from the other investor, MTH. (See the announcement PDF for more details.)

This isn't a new investor buying into Yota Devices; this is a sale disguised as an investment in the hopes that no one would notice that Yota Devices is only worth $150 million.

I know that some are spinning this as a sign that Yota Devices now has the investment capital to succeed, but my take is that this sale tells us that Yota Devices' flagship product, the Yotaphone, is a failure.

And given its history, that is no surprise.

After three years of hype, two product launches, and a failed US launch, the Yotaphone has not managed to sell significant numbers nor has it picked up any telecom partners. It has remained an expensive and difficult to acquire niche product which costs about as much as an iPhone.

If that had been a successful product from a thriving company then REX Global would be taking a smaller share for its $50 million. They would not be buying the company, and Yota Devices' parent company would not have been interested in selling.

P.S. I know that Yota Devices has a contract with ZTE to make the third-gen Yotaphone in China (this was even mentioned at the press event, or so I'm told), but I frankly don't see that happening now.

About Nate Hoffelder (11591 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

6 Comments on The Dual-Screen Smartphone is Over – Yota Devices Sells Itself in $100 Million Funding Round

  1. I know that Yota Devices has a contract with ZTE to make the third-gen Yotaphone in China, but I frankly don’t see that happening now.

    Well, the CEO of Yota Devices declared at the press conference that they sold the stock specifically to fund the production of the 3rd gen Yotaphone.

  2. There’s another dual screen phone with E-Ink out there: the Huateng Flag D1. Charbax and others show it on YouTube.

  3. “If that had been a successful product from a thriving company then REX Global would be taking a smaller share for its $50 million. They would not be buying the company, and Yota Devices’ parent company would not have been interested in selling.”

    They must see something in them. They did just spend a lot of money to get their hands on it.

  4. I don’t understand your skepticism. I’m surprised to read that Yota devices is worth $150m, much more than I’d have expected from a one-product company (ignoring the few rather unknown products they might also have sold in the past). That somebody is willing to pay that much indicates to me, that there is hope that the investment will be profitable. Since the announcement doesn’t mention share prices, at which the put or call options can be used, it looks like it is unknown, whether it is a profitable or risky deal for either side. Perhaps, in oder to produce higher volumes and bring the device price down, you really need more capital.

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