Xybernaut's shares rocket on word of IBM wearable computer talks

A small US company that is trying to pioneer "wearable computers" claimed on Friday that it was in advanced discussions with IBM on a variety of projects.

On the day Xybernaut issued the IBM alert, its shares more than doubled in value to close at $4.16. But when Big Blue failed to match Xybernaut's enthusiasm for the talks, its share price dropped back $0.59 cents to $3.56.

An IBM spokesman confirmed that it was in discussions with Xybernaut, but added: "We talk to many companies."

Xbernaut already licenses IBM's speech recognition technology, Viavoice, which it uses in its Mobile Assistant (MA) IV wearable computer. This is based on a Pentium PC and runs Windows.

Edward Newman, Xybernaut's chief executive, claimed the talks were aimed at expanding the two firms' existing relationship and "combining the patent position and know how obtained by Xybernaut in the wearable PC arena with IBM's resources".

Although he would not detail exactly what the company was talking to Big Blue about, he said that discussions had covered such joint activities as production, licensing, the development of future generation products and supporting technologies, marketing and sales.

Newman also claimed that the supplier had more than 450 granted and pending patent applications worldwide. On Friday, it announced it had received a "notice of allowance" from the US Patent and Trademark Office for two additional significant patents, covering a "Detachable Computer Structure".

Xybernaut makes the MA IV computer, which is attached to a belt, and comes with a minute VGA monitor, microphone and earphone that are worn at eye level.

Although the supplier claims to sell the offering worldwide, so far its announced sales have been small, while its losses have been huge in comparison. For the six months ended June 30, 1999, it generated revenues of $1.3 million and made a net loss of $9.4 million compared with revenues of $358,700 and net losses of $3.8 million in the same period last year.

Late last month, however, it announced a $2.8 million order from US IT outsourcing company, DynCorp, which should boost its top line. DynCorp's staff will wear the computers for aircraft maintenance and inspection, asset management, facilities inspection, security, and field data collection.