More CUBE bashing by Greenberg...
BUSINESS INSIDER -- What's Behind C-Cube's New `Partnership' With
LA Vision?
Paul Jain is said to play key role at video upstart
Herb Greenberg
MILPITAS
Early last month Milpitas-based C-Cube Microsystems, whose profits have been under pressure lately, touted in a press release
that it had signed LA Vision of Hayward as a customer. LA Vision, in turn, issued its own press release the same day boasting
that it had forged a ``strategic partnership'' with C-Cube as well as Digital Equipment.
Sounds pretty impressive, but a closer look at LA Vision might raise questions about how ``strategic'' those relationships really are.
Founded last year, privately held LA Vision makes devices that download video and audio from camcorders onto PCs. The
company's recorded telephone directory lists just 15 employees, and doesn't yet have a business license to operate in Hayward
(tsk, tsk). Records filed with the California secretary of state list Thye Seng Tan as CEO, secretary and chief financial officer. But
according to several sources, the company's informal leader is none other than Paul Jain, the founder and former CEO of Media
Vision, which made PC sound cards.
Media Vision's swift rise and fall, which was well documented several years ago by this column, has become legendary in Silicon
Valley. The Fremont company's troubles sparked investigations by the FBI and the Securities and Exchange Commission. The
probe started shortly after Media Vision admitted that it had falsely reported its 1993 sales and earnings. The company
subsequently restated the year's $20 million profit as a $99.2 million loss.
Media Vision eventually filed for Chapter 11 bankruptcy, its name and assets were sold and it re-emerged as Aureal
Semiconductor. Last June, Media Vision's former sales director, Michael Humphress, pleaded guilty to fraud and agreed to
cooperate in the investigation of other Media Vision execs, including Jain. Humphress had been charged with helping Media Vision
inflate revenues by shipping unordered goods, failing to account for products that were returned and deceiving company auditors on
whether certain accounts were collectible. Jain has consistently denied any wrongdoing, and according to several former
employees, went on to play leading roles -- officially as an outside consultant -- at several small companies before the start of LA
Vision.
While he's also a consultant at LA Vision, his name is second -- after the CEO's -- in the company's recorded phone directory.
Several sources say Jain makes many of the key decisions and personally gets involved in striking deals with suppliers. LA Vision
appears to be getting off to a fast (and some might say loose) start. The company's Web site brags that its ``Snazzi'' and ``Dazzle''
video-capture products are the first of their kind. It says they're available at Fry's and Best Buy. However, salesmen at several
Fry's had never heard of either product and couldn't find them in their databases.
Meanwhile, a competitor based in Fremont, AVerMedia Technologies, is expected to start shipping as early as next week its own
video capture product, the MPEG Wizard. Similar products are expected soon from Campbell-based Videonics (the Python) and
Utah's Iomega (the Buz). All but the Buz use the same C-Cube chips that LA Vision is using, but only LA Vision shared a joint
press release with C-Cube. In the release, C-Cube's marketing chief said that LA Vision's Dazzle ``really hits the mark'' for a
video capture product.
Why the special treatment, especially for a company as small and unproven as LA Vision? C-Cube officials, in keeping with their
blackout on dealing with this column, didn't return my calls. Neither did Jain or LA Vision.
What about LA Vision's claim that it has a ``strategic partnership'' with Digital Equipment? A Digital spokeswoman says Digital
doesn't consider LA Vision a strategic partner -- a relationship reserved for only a handful of its biggest customers.
Finally, this twist: C-Cube's former CEO and board member Bill O'Meara was Jain's boss at Headland Technology, which was a
part of LSI Logic. Jain was eventually fired from Headland. O'Meara, who remains one of C-Cube's largest shareholders, makes it
clear he is ``not a fan'' of Jain. He says he didn't know of the connection between C-Cube, LA Vision and Jain, but adds that Jain
remains innocent until proven guilty. C-Cube is doing business ``with an innocent man.''
Federal regulators, meanwhile, are continuing their probe. |
