Harman Acquires Yurbuds LLC to Develop Sports Headphones - Analyst Blog

Harman International Industries, Incorporated HAR, a leading infotainment and audio group, recently announced that it has acquired St. Louis-based Yurbuds LLC. However, the financial details of the deal were not made public. Yurbuds will join Harman's lifestyle division and all its personnel will be retained.

Founded in 2008, Yurbuds engages in the production of custom-sized headphones. With approximately 40 employees, Yurbuds has an extensive intellectual property portfolio, including more than 60 patents and 70 trademarks for design and technology, including headphones, wearables and more.

Harman believes that with the addition of Yurbuds to its portfolio, the company will be able to develop next generation headphones designed especially for athletes.

Harman continues with its policy of expanding both internally as well as externally through strategic acquisitions of small but niche companies. It had spent around $101.3 million in acquiring various companies in 2013 alone. Recently, Harman acquired maker of hardware and proprietary software solutions, AMX LLC for a sum of $365.0 million.

Per Gartner, in-vehicle infotainment systems will represent around $3.0 billion semiconductor market opportunity by 2017. Hence, being the leading infotainment group, Harman's near-term prospects are bright.

We believe that Harman's new manufacturing capacities, growing product pipeline, solid patent portfolio, new awards as well as product launches will boost its top line and profitability in 2014 and beyond.

Moreover, recently car makers such as BMW, Daimler and VW Group selected Harman's technology in their car lines. Also, Harman won customer awards from Toyota to supply infotainment solutions across its car models in Europe. All these will act as major growth divers for Harman, going forward.

Additionally, we believe that the recently announced partnerships with Softbank, Sprint Corp., Trikomsel and Brightstar will expand Harman's market share, going forward.

Meanwhile, Harman continues to expand due to its partnerships with the likes of Apple AAPL and Google (GOOGL). However, intensifying competition from Sony Corp. SNE remains a concern.

Currently, Harman carries a Zacks Rank #3 (Hold).