One of several companies that had hoped to help secure software, music and other digital products against unauthorized copying, Preview Systems found itself overshadowed in the market by competitors including Microsoft and InterTrust.
After an initial public offering that skyrocketed to nearly $70 a share in December 1999, the company's stock fell steeply to hover near $3 for the past six months. In February, the company announced that it was cutting 25 percent of its staff and looking for a buyout partner.
Only part of that promise is being realized. The company said Friday that it will sell its software security technology to Aladdin Knowledge Systems. It's still looking for a buyer for the rest of its assets, including technology for protecting music against unauthorized copying.
"Since its announcement in February 2001 that it was exploring strategic alternatives, the company's board of directors...has undertaken considerable efforts to explore many strategic alternatives," the company said in a statement. "It has concluded that the best interests of its stockholders will be served by selling its assets to Aladdin, winding down the remaining business of the company, and distributing the available cash to its stockholders."
Preview Systems' demise is just one of several forces shaking the so-called digital rights management market this year. The technology is on the verge of mainstream use, as the major record companies and Napster prepare subscription music services that will have some type of copy protection built in.
InterTrust and Microsoft are vying for the top spot in the market, with Microsoft taking advantage of features built into the Windows operating system. However, InterTrust recently sued Microsoft, alleging that the software giant violated the smaller company's patents.
Preview Systems said that money from the sale of the company's remaining assets will be distributed to shareholders after the close of the Aladdin deal.