Xybernaut soars on IBM deal

Xybernaut Corp. (Nasdaq: XYBR) rocketed 27 percent Thursday after it said IBM (NYSE: IBM) will design, develop and manufacture the computer portion of its next generation of wearable computer systems.

Shares in the maker of wearable computing and communications software were up 2 3/16 to 11 1/8, and were the 10th most actively-traded on the Nasdaq Thursday. The stock still hasn't recovered from a recent sell-off, in which investors bailed after an outside auditor warned of "substantial doubt" about the wearable computer maker's ability to continue because of "continuing losses and need for more capital."

IBM said the move reinforces its plan to delivering pervasive computing, including devices that facilitate e-business. No financial details of the deal were released.

Xybernaut (Nasdaq: XYBR) also reported reduced losses and doubled revenue for its recent first quarter.

The company said May 9, that net loss of $4.5 million, or 13 cents per share, compared to a year-ago loss of $4.2 million, or 19 cents per share. First quarter revenue increased to $1.5 million from $654,163 a year earlier. There was no First Call consensus for the company.

Xybernaut's main competitors include Palm (Nasdaq: PALM), Teltronics (TELT) and Toshiba according to Hoover's Online.