Oh sure, XYBR is hiring Lou Gerstner, LOL: Xybernaut Hires IBM to Make 24,000 Wearable Computers
2001-11-15 10:31 (New York)
Xybernaut Hires IBM to Make 24,000 Wearable Computers
Fairfax, Virginia, Nov. 14 (Bloomberg) -- Xybernaut Corp.
hired International Business Machines Corp. to manufacture 24,000
of its new wearable computers over the next 18 months. The shares
added 42 percent, their biggest gain in more than a year.
Xybernaut agreed to pay about $50 million for the strap-on MA-
V, said Edward Newman, Xybernaut's chief executive, in an
interview at the company's booth at the Comdex trade show in Las
Vegas. He said IBM will also sell the devices, which will retail
for $4,000 to $5,500. IBM had no immediate comment. Xybernaut will
pay IBM as much as $4 million if fewer units are built.
The Fairfax, Virginia-based company needs a hit with the
latest version of its Mobile Assistant line. Xybernaut has
reported losses every quarter since selling shares to the public
in July 1996. Since it was founded in 1990, the company has lost
about $95 million.
Xybernaut shares rose 85 cents to $2.89 in trading of 5.6
million shares, more than 15 times its average daily volume. The
stock had its biggest gain in more than a year after PC World's
Web site reported that security at major U.S. airports will adopt
the wearable computers in three months. Dewayne Adams, Xybernaut's
chief strategy officer, who was interviewed for the story, said
his comments were misinterpreted.
``We have no contract,'' said Adams. ``We talked about ideal
applications for the wearable computer for security. We talked
about various possibilities.''
Sales
Newman said the company has already sold more than 500 of the
MA-V devices in the fourth quarter, including 300 to Bell Canada,
which is providing the computers to field technicians. He said the
new model, introduced in June, shipped few units in the third
quarter.
Worn on a belt, the MA-V weighs about two pounds and comes
with a 500-megahertz Celeron processor by Intel Corp. The user
views data through a head-mounted display and enters information
through a tiny keyboard worn on the wrist.
Newman said its $1,500 consumer wearable computer, the Poma,
manufactured by Hitachi, will not be shipped in time for
Christmas, as the two companies announced in July. He said the
company staff is overwhelmed with the release of the MA-V.
``We just don't have the manpower,'' said Newman. ``We pushed
that off to the end of the first quarter.''
Losses, Declining Cash
On Monday, Xybernaut said its third-quarter loss widened to
$8 million, or 15 cents a share, from $5.9 million, or 15 cents,
in the year-earlier period. Revenue increased to $2.3 million from
$2 million. Shares outstanding increased 35 percent to 52.3
million.
Cash fell to $2 million on Sept. 30 from $8.2 million on June
30, said John Moynahan, chief financial officer. He said Xybernaut
recently raised cash by selling shares at a discount to market
price in a private placement.
Xybernaut sold 1.3 million shares on July 31 to Eva Holdings
Ltd., based in the Turks & Caicos Islands in the British West
Indies, at $3.02 a share, a 21 percent discount to the market
price that day, according to company filings with the Securities
and Exchange Commission.
Xybernaut, which last month filed a registration statement to
make the shares freely tradable, said the discount to market price
was 10 percent when the sale was negotiated. Eva Holdings also
received 119,880 warrants to buy Xybernaut stock at $6.25.
``We go back to the same guys on a fairly regular basis,''
said Moynahan. He wouldn't say who owns Eva Holdings.
Newman said he expects the company to turn profitable in late
2002 or early 2003. That gave him the confidence to spend about
$400,000 on this week's trade show in Las Vegas, where 40
employees wooed prospective customers in a 2,000-square-foot
booth.
He predicted wearable computing will become a $1 billion
industry worldwide by 2003, with Xybernaut either selling or
collecting patent royalties on most of that business.
``We think we own this industry,'' said Newman.
--David Evans in Las Vegas (310) 910-8811 or
davidevans@bloomberg.net through the San Francisco newsroom/jt/jk
Story illustration: To graph the performance of Xybernaut's
shares, see {XYBR US <Equity> GPC D <GO>}. |
