Confusion Over Company Names Hurts Zi
Corp.
By STUART WEINBERG
TORONTO -- As if Zi Corp. (ZICA) didn't have enough on its plate. What,
with its share price languishing below $10, an ongoing legal dispute with its
main rival, and a technology sector more volatile than a level-five hurricane.
The last thing the Calgary software maker needed was to be confused with a
company whose president resigned amid news of an earnings warning.
But that's exactly what happened Wednesday.
Xicor Inc. (XICO), a California semiconductor company whose name sounds
awfully close to Zi Corp., warned late Monday that its second-quarter results
won't meet expectations, and its president resigned.
On Tuesday, Xicor's share price plummeted 11 11/16, or 64%, to 6 11/16 in
heavy Nasdaq trading. The stock fell another 3/8 Wednesday, closing at 6
5/16.
Zi Corp., which moved from the SmallCap market to the Nasdaq National
market last month, fell 0.65 to 8 5/16 Tuesday. On Wednesday, it fell 1.68,
or 20%, to 6 5/8 on heavy volume. The stock is rebounding Thursday, up 1
1/4, or 19%, to 7 7/8 on about 413,000 shares.
"We had 50 to 60 calls from people Wednesday asking, 'What's going on?
How come you're off? How come your president's resigning?"' said Zi Corp.
spokeswoman Karen Attwell. "We'd never hear of Xicor before yesterday."
Xicor, a publicly traded company for 20 years, has never heard of Zi Corp.
either.
"(Being mistaken for Zi Corp) has never happened to us to my knowledge,"
Xicor spokeswoman Wendy Matthews told Dow Jones. "I guess they got
painted by the same brush because of the phonetic connection."
Zi Corp. chairman and chief executive Michael Lobsinger can be excused for
not seeing the humor in the situation.
"It's an incredible coincidence," he said. "A lot of investors thought that it was
our ship that was sinking and wanted to jump off the ship. Turns out it was the
wrong ship."
Internet Chatroom Rumors Hurt Share Price
Zi Corp. shares have fallen precipitously since February, when they were
trading in the high 30s on Nasdaq. Like other technology stocks, the
company - which makes linguistic-database software - has been hurt by
market instability, interest rates fears and the flight from technology stocks.
More insidious, however, have been the rumors fomented about the company
on Internet chat groups, Lobsinger said.
"It was put out on the chats that I sold 5 million shares in March," he said. "I
didn't."
Rumors also circulated in chatrooms that the company was losing its licensing
partners, had no money, and was about ot go out of business, Lobsinger said.
"They're all false."
In April, Lobsinger wrote an open letter to shareholders in an effort to set the
record straight, but the stock has continued to fall.
Zi Corp., in fact, has C$60 million in the bank and no debt, Lobsinger told
Dow Jones. Its licensing partners aren't leaving, and more are being added, he
said.
Lobsinger said an ongoing patent dispute with its main rival Tegic
Communications Inc. hasn't affected the share price.
While the company has yet to earn a profit, it signed 16 new customers in the
third and fourth quarters of 1999, Lobsinger said. The customers will use Zi
Corp. software in their products, which are expected to be hit the market in
the third and fourth quarters of 2000, he said.
The company's existing customers include telecom giants Alcatel S.A. (ALA),
which will soon include Zi Corp. software in all of its handheld devices, and
L.M. Ericsson Telephone Co. (ERICY), which already uses Zi Corp.'s
products in China.
Zi Corp.'s efforts so far have focused primarily on the potentially huge
Chinese market. The company has already signed licensing contracts that it
expects will give it a 65% market share in the
global-system-for-mobile-communications (GSM) wireless phone market in
China, Lobsinger said.
The company's Oztime.com unit has a contract with China Radio &
Television University to deliver courses and certification programs on a
platform educational portal, Lobsinger said. The portal is expected to have as
many as 15 million users who will pay about US$10 for each course they
take, he said.
"Investors don't understand the magnitude of this (contract)," he said.
Lobsinger hopes that will soon change. If all goes according to plan, everyone
will remember the company's name.
-Stuart Weinberg, Dow Jones Newswires; 416-306-2032 |
