Anyone have any idea where we are with this...there's some scarry stuff being written...
* NEW PROJECTAVISION TVS FACE FUZZY PROSPECTS: MAKER OF PRICEY SETS
CONFRONTS LAWSUITS, POTENTIAL PROFIT HIT IN BELATED LAUNCH
Judy Temes
786 Words
5115 Characters
05/19/97
Crain's New York Business
30
News
Copyright (C) 1997 Crain Communications, Inc. All rights reserved.
Martin J. Holleran has sold more than 10 million television sets
during his lengthy career in consumer electronics. But he will have to
* muster all the salesmanship he has to save Projectavision, the troubled
Manhattan company that he heads.
* After seven years of losses, Projectavision has finally launched its
long-promised first product this month. Its 60-inch digital television
is on sale for $8,000 at Harvey's and will hit Nobody Beats The Wiz
stores next month.
But even if some consumers decide to pony up the cost for the home
theater-which doubles as a giant computer monitor with reasonably good
* graphics-Projectavision still faces huge obstacles. Shareholders are up
in arms over the company's plummeting stock price and have initiated a
class-action suit.
Founder fighting for patents
The founder is suing the firm for wrongfully firing him and taking his
patents. Should he prevail, that suit alone has the potential to wipe
out most of the initial profits.
And if that's not enough, more powerful competitors may soon launch
* similar products, since Projectavision doesn't own the technology it is
using.
None of that seems to deter Mr. Holleran, who is optimistic that tiny
* Projectavision can sell 20,000 units in the next 12 to 15 months,
generating $100 million in revenues for the cash-starved company. Since
going public in 1990, it has racked up $21 million in losses.
"We've had a lot of reasons to throw in the towel," says Mr.
Holleran. "But we have a vision, and we will be successful."
The company hopes that when larger competitors realize how successful
* the new set is, they will be eager to license Projectavision's exclusive
design.
* The television set that Projectavision is bringing to market combines
what the industry calls front and rear projection. It's a regular TV and
a big-screen projection television rolled into one, without the loss of
brightness and color that often detract from big-screen TVs.
It also can be plugged into a laptop computer to display Internet
images. Its engine and light source can be lifted out to project a clear
image onto a 20-foot wall. Mr. Holleran says this unique feature makes
it ideal for the business market as well.
But analysts say consumers will balk at the high price of the Digital
Home Theater. "I doubt there is much of a market for it," sums up one
analyst.
The reason for the high price tag is that the heart of the new
set-Texas Instruments' digital light processor-is still in its infancy.
* Mr. Holleran believes that Projectavision will be able to reduce prices
as the technology becomes more accepted.
In the meantime, there are other hurdles, like manufacturing. With
* just 12 employees at its Penn Plaza offices, Projectavision will rely
on outside manufacturers to produce the sets. How fast they can crank
up production is another unknown. And competitors are likely to step
in, since Texas Instruments has already licensed the new processor to
others.
Then there are the lawsuits. Eugene Dolgoff, who founded the company
in 1988, contends that he was unfairly fired in 1995 after Mr. Holleran
claimed that he failed to perfect the original technology. "He had a
responsibility to develop the product, which he never did," says Mr.
Holleran.
Accusations fly
* Projectavision abandoned Mr. Dolgoff's invention and instead licensed
Texas Instruments' technology. Later, it charged Mr. Dolgoff with
sexually harassing an employee.
Mr. Dolgoff, for his part, says the charges are bogus. "If they would
have let me run the company like it should have been run, we would have
had a product out years ago," he argues.
As it is, the product was delayed for years even while investors were
told that an introduction was imminent, according to court documents.
"The product never appeared, and people lost their shirts on this," says
Robert J. Berg, an attorney who represents some of the shareholders.
The stock went from $5.25 a share at its initial public offering in
1990 to more than $16 a share in 1994, based on promises of lucrative
licensing deals with major manufacturers like Matsushita. It has been
trading at around $2 a share or below since December.
So far, the courts seem to be favoring Mr. Dolgoff. A panel of judges
recently ruled that he has enough of an interest in the design patents
to let a receiver take control of them while the two sides hash out who
is the rightful owner.
* Mr. Dolgoff is asking the court to set aside 10% of Projectavision's
* gross revenues until it makes its decision. If Projectavision winds up
having to forfeit that sum, the set-aside will eat up all of the $6
million to $7 million in profits the company hopes the product will
generate in its first year.
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