

E Ink bought for $215M - breck
http://www.boston.com/business/ticker/2009/06/pvi_agrees_to_b.html

======
frig
PVI was/is essentially the only company that actually manufactures E-Ink
screens. E-Ink was basically all-IP, and PVI was basically the only
significant manufacturer to license the tech to manufacture the actual
screens.

I'm inserting "basically" b/c it's been awhile since I looked at things in
earnest and I don't want to make absolute statements I'm not 100% sure of, but
I'd be 95%+ sure that "PVI was the only mass-manufacturer of screens based on
E-Ink's technology."

What I was never clear on was which way the arrangement originated: did E-Ink
specifically pick PVI and contract out the manufacture of the screens, or was
it the other way around?

Either way this is basically the manufacturer and sole direct licensee buying
out the licensor to:

\- (1) get a long-term "discount" on licensing fees

\- (2) firm-up the exclusivity of the PVI/E-Ink arrangement: now that PVI owns
E-Ink it's _very_ unlikely that E-Ink will license the tech to any other
manufacturer, no?

The amount involved is probably a bargain: the demand for e-ink screens is
probably going to go through the roof soon, so "locking-in" the license cost
now is smart; it's also excellent timing, b/c given how much investment has
been pumped into E-Ink for how long, and given the current state of the
financial world, there's plenty of investors who'd probably be very happy with
a relatively modest cash payout right this second (but who might have wanted
more if the deal had been extended a few years back, and who might want more
if the deal were extended a few years from now).

Hopefully someone better-informed on this than I am will step in and correct
any errors in my summary and provide any additional background information
they have.

 _NB_ : E-Ink is not the only company with "epaper" screen technology; I'm
talking about E-Ink, not the general epaper market.

------
electromagnetic
Note to poster: It's in bad practice to change the article name. In this case
it was totally unnecessary as the one point of reading this article for me was
to find out _who_ bought out E Ink, which incidentally was the thing you
excluded when you decided not to use the original articles title.

~~~
breck
do you know who PVI is?

i don't and think most people don't either. so using that as the first word
does a worse job at conveying the point. you'd have to click it anyway to find
out who PVI is.

BUT, i do agree, i should have made it "e ink acquired by __", but I think it
is okay to change the article name if the new name better conveys the
importance(the important thing here is e ink).

~~~
sker
Just out of curiosity, why is E Ink the important thing here? I'm located
outside of the US and I don't know who either company is, so they both hold
equal importance to me. Actually if I was from Taiwan, PVI would be the
important thing to me.

~~~
breck
good point. i've known about them for a decade(just by being from boston).

they make the screens in the kindle and sony ebook.

~~~
electromagnetic
I was from the UK so Sker helped with the point I, apparently ineloquently,
tried to make. I've only ever heard of E Ink in passing mention when
discussions are made to the uses of ePaper in articles, if I wasn't into tech
news as much as I am then I wouldn't have known that E Ink was a corporation
at all.

Personally I knew who PVI was, but only because my dad's friend contracted in
Singapore and then Taiwan. The thing that attracted me to the article was
actually the dollar amount.

------
mblakele
"Prime View International, or PVI, of Taiwan describes itself as display
provider and the world's highest volume supplier of ePaper display modules."

The deeper story seems to be that PVI parts also go into Amazon's Kindle. So
this deal should cut some markup out of their manufacturing costs. Of course,
they'll have to balance that against the purchase price.

------
jmatt
E Ink seems more valuable than $215M. It's a great idea, they own the patents
and they are already manufacturing components. They are growing in a new
sector. Or expanding into netbooks and laptops depending on who you talk to. I
have to imagine that this sale is as much about getting a hold of
infrastructure for faster growth as it is about making money.

~~~
irrelative
I agree -- the number seemed low to me too.

That said, how much of our idea of valuations come from web apps? I was
thinking about the number $215M and realized the only reason that it seems
small is because Facebook is valued at $6B, or YouTube was bought for $1.6B.
Outside of software, I can't think of companies that are really valued at
these amounts, unless they make power plants or airplanes or some other giant
necessity.

Is this how much companies are actually worth and we're all just in such a
ridiculous bubble that we can't see it, or did these guys get desperate and
cash out?

~~~
electromagnetic
I'd say it's probably a mix of the two. The economy is currently rather crappy
and we have no clue of the current situation of the company, perhaps they care
more about getting the technology out there than making insane profits.
However, the deal probably included shares in PVI and we're just not privy to
that information either.

Facebook has a user base of ~200 million active users. They have an income of
$300 million and only 700 employees. When you consider companies that have a
fraction of their customer base, selling for $6B is pathetic. Ford, despite
losing money like an alcoholic loses body fluids, has a revenue of ~$150
billion with only 5.5 million customers. Ford gets an average of $27,000 per
customer 'per year' (this is based off their revenue divided by their
customers, I'm trusting that with a company so old these numbers average out
the money you'll give to Ford later in your vehicles life through parts, etc;
so essentially the average person pays $27,000 through a vehicles lifetime),
Facebook gets a total of $1.50 per customer per year. Compare Facebook to
Google, who get roughly $58 per customer per year. So even by internet
standards, Facebook is worthless for its user base, it hasn't capitalized at
all on its potential market like Google has.

Companies like E Ink only have a handful of 'customers' and deal with large
shipments. They're probably more comparable to a regional meat distributor
than an online industry. They ship their product to only a handful of
companies and then it's out of their hands.

The only reason so many of us know who E Ink is, is because it's used in
products we care about. I believe the type of ePaper that will get a company
worth into the billions will be manufacturers of color ePaper like used in the
FLEPia. This offers instant conversion into low cost computers, cell phones
and mp3 players.

~~~
Retric
# of customers is a horrible metric to determine the value of something. It's
a holdover from the as the first metric a company could use in the bubble to
get value when it's not making money and says nothing about how much that
customer interacts with the company or how much value they derive from it. I
might go to dmv.org every year vs. several times a day, but I am just one
"customer" of both sites.

