September 27, 1999 5:20 PM PDT

Rex springs back to life with Xircom acquisition

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A credit card-sized organizer called Rex that generated lots of hype but low sales will get a second chance at life in the hands of a new owner.

Xircom, which specializes in computer peripherals, said today it will buy the Rex product line from Franklin Electronic Publishers for $13.25 million.

Within 60 to 90 days, Xircom will release a new organizer for the corporate market, said the company's chief executive Dirk Gates. Eventually, Xircom will develop devices that allow for Web clipping, cell phone synchronization, and wireless communications.

In addition, Xircom said it has agreed to buy Entrega Technologies, which makes universal serial bus (USB) equipment.

The Rex organizer, described as the leading "wearable information accessory," burst onto the scene at the Comdex trade show in 1997. About the size and heft of a credit card, the Rex has a calendar and address book that synchronizes with a PC--similar to the larger Palm handheld organizer.

Despite the sleek style, however, sales were tepid. In June, Franklin reported $30.1 million in losses for its most recent fiscal year. Franklin pinned much of the blame on Rex and said it was considering discontinuing the device.

Rex revenues rose from $10 million last fiscal year to $16 million this year, according to Franklin. Rex devices originally sold for $150 but are now priced as low as $50 in Costco stores.

Gates said Franklin did not have the resources to market or develop the product line. The company also bit off more than it could chew by trying to sell it as a competitor to the popular Palm Pilot.

"Franklin has struggled as a company to fully realize the potential of the product...It was marketed as a head-to-head competitor to the Palm, which was a mistake," he said. "The key differentiator is that it is truly an unconscious carry."

Xircom will more closely target Rex to corporate accounts and expand the applications for the platform. The first Rex marketed under the Xircom name, for instance, will include a random number generator. Number generators are used in security systems to limit network access. Currently, random number generators come on credit card-sized devices that perform no other functions.

The company later will include applications to allow users to download information from the Web. Within a year, Rex may connect wirelessly to networks, Gates added.

In the end, the devices will function more like Blackberry pagers, which can send and receive messages and maintain databases, rather than the Palm.

The Rex organizers from Xircom will range from $100 to $200, depending on the functions, said Gates.

Also today, Xircom said it would buy Entrega for approximately $23.1 million. The acquisition will complement Xircom's line of docking stations and other USB products, Xircom said.

 

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