NIC Co. raises $2 million in financing

Larry Ellison's New Internet Computer Co. lands $2 million in new funding as the company looks overseas to find a market for its low-cost Linux-based Net appliances.

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Larry Ellison's New Internet Computer Co. has landed $2 million in new funding as the company looks overseas to find a market for its low-cost Linux-based Net appliances.

The company, which sells a low-cost Linux-based Internet appliance, said that the new investment comes from private investors in Asia and South America as well as the United States. Ellison, who is NIC's chairman, will remain the company's largest shareholder.

The NIC Co. is one of the last players in the once-promising market for low-cost alternatives to the PC. Big names such as Sony, 3Com and Gateway, as well as start-ups such as Netpliance, have all stopped selling the devices in the past two years.

It has been a time of transition for the NIC Co. In April, CEO Gina Smith announced she was leaving the company. Peter Clark, the company's chief financial officer, was named CEO to replace her. Clark moved the company from San Francisco to Palo Alto, Calif. The company has also seen its ranks thin to a staff of 14, down from 18 or 20 employees.

Clarks said in an interview that the new funding shows there is still backing for a PC alternative despite the tough economy and the difficulties there have been for that market.

"I think it's a real sign of credibility," Clark said.

Although the U.S. market for cheap PC replacements has proven to be less robust than analysts had once expected, the NIC Co. says it is seeing growing interest overseas. The company is aiming to have 30 percent of sales next year from outside the United States. The company has also Christopher Ashby, President Clinton's ambassador to Uruguay, to head its international effort.

More than half of the new funding came from foreign investors, adding that several of those investors are also working to bring business to the company, Clark said. "We have deals that are in place."

NIC is also part of a deal to bring Internet access to low-income housing administered through the federal Housing and Urban Development department. The deal could generate several hundred thousand unit sales, Clark said, adding that there is no guarantee of how many units the NIC Co. will supply. The company has been working on the HUD deal for more than a year.

All told, Clark said the company has shipped 40,000 units since it began shipping the Web-browsing devices in 2000.

That number is lower than previous shipment numbers the company has reported. In June 2001, the company said it was aiming to have shipped 100,000 units by year's end. Smith acknowledged this February that the company was short of the 100,000 goal, but said, "We came very, very close."

The NIC is not Ellison's first try at building a device that could offer the power of a computer over a network. Ellison's earlier attempt at a Microsoft-free PC--the Network Computer--failed to hit the mark and that company went into the software business, eventually renaming itself Liberate Technologies.