Jawbone liquidation inflicts losses
Analysts say working on health-related products and services is a step in the right direction
Jawbone Inc is liquidating, though its chief executive officer is starting again with a company that moves out of the fitness-tracker business in favour of health-related products, an area that deeper-pocketed rivals also are entering.
Founded in 1999, Jawbone was once a darling of Silicon Valley and regarded as a pioneer in wearable technology. Yet the company missed payments, had manufacturing issues that led to refunds for its fitness device and cut employees, despite raising multiple rounds of funds over a span of more than a decade. The closely held company also struggled against bigger competition that moved into the wearables market.
Now Jawbone is going out of business and investors, including BlackRock and the Kuwait Investment Authority, are tallying losses from more than $900 million (Dh3.3 billion) in equity and debt funding the fitness gear maker raised over the years.
For his part, CEO Hosain Rahman has founded Jawbone Health Hub, according to people familiar with the matter. Many Jawbone employees are moving to the new company, said the people, who asked not to be identified because the issue is private.
The liquidation comes after multiple strategic changes and failures. Last year, Jawbone put its wireless speaker business up for sale to focus on health and wearables. It also ended production of fitness trackers and sold its remaining inventory to a third-party reseller. Last January, the company raised $165 million from lead investor Kuwait Investment Authority at about half its 2014 valuation of $3.2 billion, according to Pitchbook Data Inc.
Jawbone has also been locked in legal battles with Fitbit Inc. since May 2015, when Jawbone accused Fitbit in a lawsuit of plundering employees and critical proprietary information. The biggest asset left in the company is the remaining litigation against Fitbit, from which Jawbone thinks it can generate returns back to its creditors, one of the people said.
The company has been working for several months to focus on health care.