***Liquidmetal’s Apple Alliance for Alloy Yet to Bear Fruit (1)
2014-09-30 13:57:40.752 GMT
(Updates with share prices in fifth paragraph.)
By Jan Schwalbe and Corinne Gretler
Sept. 30 (Bloomberg) -- Liquidmetal Technologies Inc. has
been betting on partnerships with Apple Inc. and Swatch Group
AG. It hasn’t paid off yet.
The company developed a metal that’s moldable like plastic
and has formed perpetual exclusivity agreements with Apple for
consumer electronics products, and with Swatch for watches.
While Liquidmetal has succeeded in being included in some of
Swatch’s products, the Rancho Santa Margarita, California-based
company is still waiting for a big break with Apple.
When the Apple Watch was presented on Sept. 9,
Liquidmetal’s shares plunged 26 percent, the most since July
2013, because Apple didn’t say whether Liquidmetal’s technology
would be incorporated in its new products. The two exclusivity
agreements could spell further trouble, as the royalty-based
license with Swatch for watches hinders any use in products such
as an Apple Watch.
“I suspect a third-party company would have to come to a
legal agreement with Liquidmetal and Swatch before it could use
Liquidmetal technology for a watch,” said Rene Weber, an
analyst at Bank Vontobel AG in Zurich. “In this area, Swatch
certainly has a strong position.”
Liquidmetal shares fell 0.3 percent to 19 cents at 9:53
a.m. in New York trading. The stock has gained 15 percent this
year, giving a market value of $88 million.
Bill Johnson, a professor at the California Institute of
Technology, helped develop the material, and Liquidmetal
licensed it. Before signing the agreement with Apple in 2010 and
Swatch in 2011, Liquidmetal made mobile-phone parts for Nokia
Oyj and Motorola using earlier technologies, as well as watch
cases for TAG Heuer and Casio Computer Co.
Tech Partners
“When we looked at alternatives, we felt partnering with
larger companies was the best way to take our technology to the
next level and build the credibility we need to accelerate
adoption,” Chief Executive Officer Thomas Steipp said in a
phone interview. “Both Apple and Swatch are great tech
partners, and we obviously would like to see Liquidmetal be used
in the most advanced ways by our licensing partners.”
Liquidmetal has had some advances in the watch industry.
Swatch has used the alloy for watches including the Omega
Seamaster Planet Ocean in 2009 and a 2010 Breguet model that
plays Rossini’s “The Thieving Magpie” aria.
The material “is ideal for watches because the alloy is
extremely durable, flexible, and much harder than steel,”
Swatch Chief Executive Officer Nick Hayek said in an interview
in August. The company plans to continue to work with
Liquidmetal on other projects, he said.
Amorphous Alloys
Liquidmetal manufactures and sells bulk amorphous alloys,
which it describes as metal materials that are highly resistant
to stress and corrosion. Liquidmetal alloys are similar to
titanium alloys, though they are stronger and can be molded like
plastics.
In May, the company extended an agreement with Cupertino,
California-based Apple through February that provides the
company financial and legal support for the filing of patents.
Liquidmetal also in May reached an agreement to settle a dispute
with contract manufacturer Visser Precision Cast LLC, allowing
the company to form more licenses to produce the material.
Steipp said areas of potential growth include medical
products, aerospace defense and sporting goods. Liquidmetal is
most likely to be used in handheld items, he said. He declined
to comment on Liquidmetal’s share price decline after the Apple
product announcement.
“Liquidmetal can forget it,” said Trung-Tin Nguyen, a
hedge-fund manager at Trimax Capital in Zurich. “Because the
Apple Watch is a new product and topic, Apple will have adapted
its supply chain accordingly already. I would assume Liquidmetal
won’t get a chance in the future, either.”
*Bloomberg News
