Friday, April 23, 2004

Initial Perilous Offering

Before you call your broker with the Nanosys news, take a look at this. It's an excerpt from Nanosys' SEC registration statement, and should be required reading for anybody who is contemplating an investment in a public nanotechnology company. And, remember, Nanosys is considered one of the most-promising of all the little nano firms. When you get to the bottom, take a look at some "good news bad news." (I added the company links below, for those who want more background).

nanosys logo
    Risks Related to Competition and our Industry

    We face competition from companies in multiple industries, as well as from the internal efforts of our current and potential partners and, if we fail to compete effectively, our business could suffer.

    We compete in intensely competitive markets for end user products. The nanotechnology-enabled products we are currently developing will compete directly with products incorporating conventional materials and technologies, including traditional semiconductors manufactured on the nanoscale. We believe our potential products will face significant competition from existing manufacturers in our current target markets including:

  • manufacturers of substrates for time of flight mass spectrometry equipment, such as Waters Corporation;
  • manufacturers of solar cells, such as Sharp Electronics Corporation and BP plc;
  • manufacturers of thin film electronics, such as Samsung Electronics Co., Ltd., NEC Corporation and Koninklijke Philips Electronics (NYSE: PHG, News, Web); and
  • manufacturers of memory products, such as Advanced Micro Devices, Inc. and Samsung.

    In addition, we may also face competition from focused nanotechnology companies, such as Evident Technologies, Inc., Konarka Technologies (Profile, News, Web), Nantero, Inc., NanoHorizons, Inc., Nanosolar, Inc., Quantum Dot Corporation (News, Profile, Web), UltraDots, Inc. and ZettaCore Inc. (News, Web) and other newly created nanotechnology companies.

Now, the good news: Nanosys is looking at a number of ways to apply its technology. Among them is nano-enabled memory for portable devices. If consumer habits continue the way they have, current flash-memory technology will become just a memory. Nobody wants to be tied down anymore. We want our MP3s, mobile phones and, probably in a few years our portable biothreat detectors, to stay with us, stay fast and stay cheap. Enter nano. The biggest nanomemory application of all might be portable gaming. Anyway, here's what Nanosys is doing.
    Non-Volatile Memory. We are developing nanostructures for non-volatile memory products for anticipated use in applications such as digital cameras, MP3 players and mobile phones. To develop non-volatile memory products, we are collaborating with Intel. We anticipate that we would manufacture the products resulting from these development efforts and would sell them to our collaborators or other customers for integration into a non-volatile memory device.

Intel. Cool. Not a bad little company to collaborate with. But, then, here's the potential bad news.

    We may also face significant competition from our current and future partners, such as E.I. DuPont de Nemours and Company, or DuPont, Intel and Matsushita Electric Works, which are assessing the feasibility of expanding their development and manufacturing capabilities and portfolio of intellectual property to incorporate nanotechnology-enabled components into their end user products. If our current and future partners expand their product offerings to compete directly with our nanotechnology-enabled products or actively seek to participate as vendors in the nanotechnology-enabled product market, our revenue and operating results could be negatively affected.

After July 2004, Intel could decide that it really doesn't need Nanosys Inside and just do it all in-house. When the big guys decide to do all the nano work themselves, that doesn't leave the little guys with much except an asterisk in business history books.

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