xG update

My favourite Floridians, xG, are in the news. Sort of. For those who've missed the story so far: xG has a new wireless broadband technology called variously xMax or xG Flash Signal, which it has been promoting for a while now. This is far superior to everything else, says the company, because it's much lower power than stuff like WiMax but just as fast or even faster. A brave new world of cheap wireless voice over IP awaits. They're recruiting partners, doing deals, looking for people to help sell their disruptive technology.

My problems with this wonderful vision are manifold, but most revolve around the company not actually demonstrating the technology, nor giving enough information for independent evaluation.

The sum of the technical information available is five documents, two of which are 'vision' or 'overview' pieces too vague or lacking in detail to be of much use, two which purport to be lab test results - but are, er, too vague and lacking in detail to be of much use, and one of which is a sort of press release about xG developing some mathematical tools.

Furthermore, there are some cogent, convincing and unanswered questions from wireless experts over how xG can physically do the things that are claimed - in particular, and as I've said before, there's a thing called the Shannon Limit which is analogous to the speed of light, but for wireless data transmission. You just don't break it - but as existing technologies are now fairly close to it, there's not much room for super-duper new ideas to be fantastically better. Certainly not as much better as xG claims: xG has said that no, it doesn't break the Shannon Limit, but that it has other ways of going much faster. Those ways? Not detailed. To radio people, that's as plausible as someone saying they can get to Betelgeuse in three weeks, but without breaking the speed of light - but they're not prepared to tell you how. Or take you to Betelgeuse. But would you like to help us build spaceships?

I've seen demonstrations, which didn't show much. I've spoken to the engineers and the top bods at the company. I'm as up to speed with the whole xG story as I believe a chap can be. I still couldn't tell you whether it works or not - and with the company claiming it will be launching handsets and base stations next month, that's all a bit disconcerting.

Anyway, last time I wrote on this, xG's PR company got hold of me and said "xG are visiting London, and they'd love to talk to you". Great. Unfortunately, we never managed to hook up - one phone interview was cancelled by them, and it's more than possible that an attempt to reschedule was made but lost in the eternal chaos that is my inbox - so I've had to piece stuff together from other reports.

Of which there are two. One, in Forbes, says that the company is losing more money this year than last due to "stock-based compensation costs" and higher operational expenditure. The higher opex - well, a company in launch mode certainly chews through the green. They did have an income in the first half of this year of quarter of a million dollars, but spent six million: more than half that was on the old stock based compensation. Still, it can't be easy running a company with a 1.06 billion dollar market capitalisation and no sales. I'm sure I'd pay myself handsomely too.

The other interesting article is in the FT, which says that the company is looking to be bought. Or is it?

"xG Technology, the AIM listed Florida-based technology company, is understood to be considering its strategic options with a sale of the business being one possibility.

xG Technology chairman and CEO, Richard Mooers, declined to confirm or deny whether the company was undergoing a strategic review with a possible sale as an option. "

And so on, and so forth. "It was suggested" that Google would be a good fit for the company, although "... a source familiar with Google’s strategy said he had no knowledge of xG Technology. Both xG Technology and Google declined comment. Morgan Stanley was not immediately available for comment."

It's confusing. I know that if I had a company with a breakthrough technology that was going live next month, I'd be saying different things to the FT (and, if I were the FT, I'd be asking different questions). But at the moment, that's just about all I know.

If you're reading this and thinking of buying xG, drop me a line first. Perhaps we can work out what's happening together.