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ComputerWire: IT Industry Intelligence

General Magic Inc, a provider of speech recognition technology, is to cease operations in the face of dwindling revenues and its failure either to obtain additional financing or find a merger partner.

While the demise of the Sunnyvale, California-based company, which made a $5.4m loss on revenue of revenue of $2.1m in its last quarter, is hardly a surprise, what is remarkable is that no one was prepared to make a bid for a company that had customers of the stature of General Motors.

With just $6.5m left in the bank, the company said it will discontinue operations from the close of business yesterday and initiate "an orderly and expeditious liquidation of its business."

Most of the 80-strong workforce will leave immediately, but a small team will remain to manage the sale of assets and handle obligations to creditors. Another team will remain to ensure the transfer of obligations under a $2.4m contract with General Motors' subsidiary OnStar.

General Magic is a comparative veteran, having been formed in the early 1990s by former Apple Computer Inc staff. With funding from Apple, AT&T Corp and Sony Corp, it held a successful IPO in 1995. But it always lacked focus, initially positioning itself as a intelligent agent software and handheld operating system developer. Its financial history suggests that those behind the company found it more exciting to develop technology than to make money.

Its technology was certainly appealing and in 1998 Microsoft Corp invested $6m in the company to gain an 11.9% stake and gain access to its technology.

General Magic saw great potential in the Serengeti computer network service, which was designed to integrate email, faxes, address book, calendar, news and stock quote information in one place, accessible through the phone or via a browser. The system, subsequently renamed Portico, was trialled by many of the major US phone operators.

But by 1999, the company slide had begun and it was forced to cut its workforce by 20%. Latterly the company had concentrated on VoiceXML & J2EE-based systems designed to enable companies to integrate voice access into enterprise applications.

On the news yesterday, the company's shares slumped 84% to $0.04 and the once-fashionable company is now worth just $373,000.

© ComputerWire

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