Merg, post 4842 was a news release from Bloomberg. Maybe you should email David Evans and ask him? Xyber Nots press release today was hysterical. Did you really believe what they said?
To:Roy Fortier who wrote (4838)
From: CraigGoon.com Friday, Mar 29, 2002 5:32 PM
Respond to of 4899
Xybernaut to Slash Expenses by Up to 50% as Losses Mount
By David Evans
Fairfax, Virginia, March 29 (Bloomberg) -- Xybernaut Corp. said losses of $32 million last year would prompt the maker of wearable computers to slash annual spending by as much as 50 percent and ``significantly'' reduce its workforce.
Xybernaut will make the cuts by reducing marketing expenditures and canceling or renegotiating contracts with consultants, vendors and partners, the company said. The Fairfax, Virginia-based company also said it will spend $1 million-a-year to display its products at New York City's Waldorf Astoria Hotel.
``Continued operating losses have severely impacted the company's financial position and liquidity,'' Xybernaut said in its annual report to the Securities and Exchange Commission. The company hopes to save between $12 million and $20 million a year.
Founded in 1990, Xybernaut designs computers to enable people such as aircraft mechanics and telephone linemen can use to collect information while leaving their hands free for other tasks. Xybernaut's products allow users to view data through a head-mounted screen and enter it in a keyboard worn on the wrist.
Xybernaut has accumulated losses of more than $104 million as it has sought to market the machines, which are manufactured by International Business Machines Corp. and Hitachi Ltd. Xybernaut said it will need to raise fresh funds to remain in business after cutting costs and firing of some of its 145 employees.
Dozens of company workers will lose their jobs over the next two weeks, said John Moynahan, chief financial officer, in a telephone interview.
Profitability
Moynahan also said it would take the company longer than previously expected to become profitable. Four months ago, Chief Executive Edward Newman said he expected the company to turn a profit in late 2002 or early 2003. Xybnernaut now expects to become profitable ``some time in 2003'' said Moynahan, ``depending on how quickly sales ramp up.''
Moynahan said the Waldorf Astoria marketing site, 2,500 square feet of retail space for which it agreed to pay $1 million and 400,000 shares of stock, will replace some trade show appearances, and help the company inform investors about its activities. The company leased the space for two years.
``That can be a premiere showcase for us,'' he said.
Moynahan said Xybernaut's new $1,499 computer, called the poma, which began shipping this month, is priced 37 percent below cost. The device is manufactured for Xybernaut by Hitachi. Xybernaut said it took an $885,019 charge to cover estimated losses on the initial production of 1,000 pomas. The company said it is trying to lower costs.
The company said it paid $4.1 million last year to IBM to design, development and manufacture its model MA V wearable computers, while IBM purchased $532,675 of the devices.
Xybernaut agreed to purchase 24,000 MA V computing units from IBM for about $50 million, according to Newman. The obligation can be canceled by paying a fee of as much as $4 million. Xybernaut said in its 10-K that it is negotiating with IBM to ease that financial obligation.
Xybernaut also said it negotiated a new $3 million revolving loan agreement with IBM Global Finance, paying the prime interest rate plus 200 basis points. Xybernaut's borrowing is secured by receivables and inventory, and the company must obtain a $1 million letter of credit.
As of Dec. 31, the company had $3.2 million of unrestricted cash, with accounts payable and accrued expenses of $7.2 million.
In a separate SEC filing, Xybernaut said it sold shares at a 20 percent discount to the market when it raised $8.7 million earlier this month.
The 5.6 million shares were privately sold on March 13 to Yeshuah Investments Ltd. of Gibraltar; Alpha Capital Aktiengesellschaft of Liechtenstein, and Cranshire Capital LP of Northbrook, Ilinois, the company said.
Xybernaut shares, which fell 2 cents to $1.60 yesterday, have lost 32.7 percent of their value so far this year. They traded as high as $29.97 in March, 2000. |
