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

The Dual-Screen Smartphone is Over - Yota Devices Sells Itself in $100 Million Funding Round e-Reading Hardware When 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.

Nate Hoffelder

View posts by Nate Hoffelder
Nate Hoffelder is the founder and editor of The Digital Reader: He's here to chew bubble gum and fix broken websites, and he is all out of bubble gum. He has been blogging about indie authors since 2010 while learning new tech skills at the drop of a hat. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

7 Comments

  1. reichsputin24 October, 2015

    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.

    Reply
    1. Nate Hoffelder24 October, 2015

      This is true, but I still don’t expect it to happen.

      Reply
  2. Rimon Kade24 October, 2015

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

    Reply
    1. Nate Hoffelder24 October, 2015

      There’s possibly two or three (it’s hard to tell with Chinese OEMs) dula-screen smartphones in China. None have been released yet.

      Reply
  3. Scott Lewis24 October, 2015

    “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.

    Reply
  4. hgbv24 October, 2015

    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.

    Reply
  5. […] less than a year later parent company Yota Devices sold itself to a Hong Kong investment company for $100 million. Yota Devices moved its operations to China, and the remaining  Yotaphone 2 stock was sold off at […]

    Reply

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