e-Ink

Robert Cringely, who I find to be among the astute technology analysts, had this to say about e-Ink in his blog:

This e-ink/PVI deal is especially interesting because it was announced back in June as an all-cash deal for $215 million then revised earlier this month throwing-in 120 million preferred PVI shares for the former e-ink investors. This is a huge about-face that instantly doubles the price of the purchase while also giving the former e-ink owners a share in any upside for the business — an upside they obviously expect to enjoy or they wouldn’t have held out for it.

E-ink had, over the years, raised $150 million, so while the investors were being made whole by the original $215 million sale price, their upside wasn’t much. But then the electronic ink business, for all its apparent potential, hasn’t really been that good despite e-ink’s use in both the Sony and Amazon Kindle readers. Four months ago the e-ink investors were thrilled to just get their money back. Then something changed. They just demanded (and got) twice as much money in the form of preferred shares giving them a significant piece of any upside explosion — an explosion they clearly didn’t expect when the original cash deal was negotiated.

The something that happened I believe was Apple’s entry into this market segment. That alone may have been enough. I’m guessing Apple, like it did with Samsung and Flash RAM, made a huge commitment for most — maybe all — of e-ink’s color display production for years to come. Or maybe PVI is simply flipping e-ink to Apple. Only time will tell, but I know in my bones that there is something going on here.