Vuzix Corp. shares fell Thursday after the company said in a filing that Intel Corp. has stopped development of Internet-connected headsets with the firm, officials said.
Shares of Vuzix stock (Nasdaq: VUZI) were trading Thursday afternoon at $7.22, down some 11 percent from Wednesday’s close of $8.20. The stock had dipped as low as $6.60 a share in early trading.
On Nov. 10, Vuzix received a letter from Intel stating it had been evaluating its alternatives, the video eyewear firm based in Henrietta reported in filing with the Securities and Exchange Commission on Wednesday.
“(Intel Corp.) no longer desires to pursue a strategic relationship with Vuzix,” the company said, citing Vuzix’s technology did not fit in Intel’s strategic plans.
“First of all we have a great relationship with Intel,” said Paul Travers, founder, CEO and president of Vuzix, in an interview Thursday. “They invested upwards of $25 million in Vuzix—that’s helped us develop this amazing technology at a facility here in Rochester. Even now, even with this announcement between Intel and Vuzix, it had to do with a strategic collaboration agreement but nothing else between us. We’re still doing business together.”
On Jan. 2, 2015, Intel invested nearly $25 million in Vuzix with the purchase of nearly 5 million shares of preferred stock in Vuzix. Intel, in the letter, added it wanted to work with the Vuzix to undertake an orderly disposition of Intel’s stock, that would minimize disruption in the markets.
In the filing, Vuzix stated its collaboration with Intel has not generated material revenue for the local company.
Intel expressed a commitment to work with Vuzix “to undertake an orderly disposition of Intel’s stock, subject to pricing and other conditions, that would minimize disruption in the markets,” according to the filing. At this point, Intel has not made any final decisions regarding its Vuzix stock or the timing of a disposition, officials said.
“We purchase their (Intel) silicon; they buy our products from us. It’s just the idea of us giving them access. It was a collaboration agreement that they were looking for. It had to do with the supply of waveguide technology to them and we couldn’t come to an agreement on what was reasonable there,” Travers said. “And after as much time as we were screwing around on it I think we both were getting tired of it (however) at Vuzix we have relationships with some of the biggest companies in the world besides Intel. Vuzix is an exciting company right here in Rochester.”
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