Intel Pours $24.8 million in Vuzix, Google Glass Wearables Rival
Intel (INTC) has poured $24.8 million in Vuzix (VUZI), a 17-year old Rochester, N.Y.-based virtual reality and smart glasses maker, buying a 30 percent stake in the company and diving a bit deeper into the wearables space.
Vuzix, which supplies video eyewear and smart glasses to consumers, businesses and the entertainment industry and produces technology for augmented and virtual reality, said it will use the money for operations and to back development of its next wave of fashion-based wearables featuring advanced optics and displays. The company’s flagship M100 Smart Glasses are positioned as a rival to Google’s (GOOG) Glass eye wearable.
Intel’s investment amounts purchasing 49,626 of Vuzix’ Series A Preferred Stock, convertible into 4,962,600 shares of Vuzix’ common stock at $5 per share, an equation that could change based on stock splits and dividend allocations, Vuzix said in filed SEC documents. The eyewear maker’s stock closed at $4.21 on Jan. 2.
The deal gains Intel voting privileges and the right to appoint two members to Vuzix’ board to add to the existing five directors.
Vuzix’s financial paint a picture of a company in need of a capital infusion. For the quarter ending September 30, 2014 Vuzix recorded sales of $664,586, approximately doubling its revenue from the year earlier period but posting a $3.3 million, or 31 cents a share, loss for the period compared to the $1.8 million it dropped during the same quarter last year.
For the first nine months of 2014, Vuzix lost $3.2 million from operations, continuing an extended losing streak in which its annual net losses from continuing operations reached $10.1 million in 2013 and $4.7 million in 2012. As at Sept. 30, 2014, the company had a working capital deficit of $878,432.
Vuzix typically has raised cash for operations by borrowings under notes and sales of convertible debt, equity securities and assets.
The company co-brands its M100 Smart Glasses with Lenovo in the China market and also is a member of the Salesforce Wear partner ecosystem to promote wearables adoption.
“With our current and planned activities, we are looking at continued increases in our corporate visibility and positioning as one of the market leaders in the wearable display markets,” Vuzix CEO Paul Travers said in November remarks on the company’s financial performance.
The Vuzix investment is Intel’s latest foray among a series of moves to establish an early beachhead in the wearables market. An Intel processor reportedly will run the next version of Google’s Glass technology in 2015, replacing the existing Texas Instrument (TI) chip. And, in mid-December, the chip maker signed a multi-year research and development collaboration with Italian eyeglass giant Luxottica to deliver a range of smart, fashion-conscious eyewear.
