Image source: Jawbone.
Once a key player in the wearable-technology space, Jawbone has faced ongoing problems selling its devices. Most recently, setbacks have compiled as a key investor has marked down its share estimates, and rumors about the company's desire to find a buyer have resurfaced.
Let's start with the markdown. According to an article (behind a paywall) in The Information, the investment firm BlackRock, one of the company's key investors, has marked down its equity stake in Jawbone to less than a penny.
BlackRock has invested $2 million in Jawbone over the past few years and has also given the company a $300 million loan. But Alfred Lee wrote in his article that "the markdown may suggest that BlackRock lacks confidence that the company will fetch enough in a sale to pay off equity holders."
That's really bad news for both Jawbone and its investors, because obviously the point of investing in a company is to make money. BlackRock apparently doesn't think that's going to happen with Jawbone now, even if the company is sold to a buyer. BlackRock has also raised its estimate that Jawbone will be sold from 50% to 75%.
This brings us to the second part of the bad news for Jawbone. A separate Information article (again, paywalled) said Jawbone approached at least one hardware maker over the past few months to see if it was interested in buying the company.
The article also stated that Jawbone couldn't make an August payment deadline to one of its business partners, which is bad in its own right.
Rumors of Jawbone wanting to sell its wearable business have surfaced a lot recently, but the company has said it's not interested in selling. However, this latest report continues to give credence to the notion that Jawbone may actually be saying one thing and doing another.
Jawbone's past woes
Jawbone may be looking for a buyer because it failed to bounce back after a series of stumbles over the past few years.
After a short stint as Jawbone's president, Sameer Samat left the company in January to go back to Google, where he originally worked. That was a blow to Jawbone as Samat was expected to help turn the company around.
Around the same time, Jawbone received a down round of funding -- which means it received more funding from investors, but at a lower valuation than before. That pushed the company's valuation down to its 2011 level.
The company is also embattled in a lawsuit with wearable-tech maker Fitbit (FIT +0.00%). Jawbone has alleged that former employees who left the company to go to Fitbit stole trade secrets from the company.
If all that weren't enough, Jawbone has failed to make it into the list of top five vendors for wearable-technology shipments, despite having been one of the first major players to emerge in the space years ago.
According to The Verge, Jawbone is focusing its attention on clinical-grade wearables now and is expected to release one this year, but nothing has surfaced so far.
The latest news that BlackRock doesn't expect to earn much from the sale of Jawbone, and the rumor that the company is actively looking for offers, means that investors who've been waiting around for a Jawbone IPO may never see that day come. And at this point, it looks like that may be a good thing.
