Jawbone Fails To Pay Key Business Partners and Has Almost No Inventory In Stock: Sources (businessinsider.com)

BarbaraHudson writes: The battle between Fitbit and Jawbone may be coming to an end. Business Insider is reporting that wearable fitness maker Jawbone is facing some serious financial problems as the company has almost no inventory in stock and is running out of options to generate revenue. If you click on any of the products for sale on their site, it will say that they're all sold out. Business Insider reports: "Jawbone's Facebook page is littered with complaints from customers saying they have been unable to get in touch with a customer service representative to help with defective products. The Jawbone Facebook account has been responding to these issues, blaming a backup of complaints for the delays. A Jawbone spokesperson said the complaints were because of Jawbone's customer service restructuring. Another person close to Jawbone told Business Insider that there is almost no inventory left and the company is running out of options to generate revenue. The speculation among some Jawbone employees now is that the company might sell to a private equity firm if it can't raise more money, the person close to the company said. Jawbone also declined to explain why its inventory has sold out. A spokesperson said, 'they have sold through what they have to sell.' The company said it was not because it couldn't pay vendors though. It would not provide any estimate on when products would be available for sale on its site again, but did say it planned to make more products." The report says that, according to an internal NexRep email, the company cut ties with the customer service agency NexRep earlier this month after Jawbone failed to make payments. "The email, written to NexRep employees by a NexRep executive, claims that Jawbone is 'struggling financially' and that it couldn't pay NexRep for its services," reports Business Insider. "It also says Jawbone is 'fighting hard' to raise more funding. 'Jawbone is not able to pay us for past services, and their ability to pay us in the future is uncertain at this point,' the NexRep email reads." This resulted in "many staffers being laid off."

Comments

It is a possibility

[johnsmithperson123]

That they were affiliated with Hanjin Shipping, which went bankrupt a week ago and as far as I know their ships are still stuck off of the Pacific coast. If they didn't keep a large inventory missing a shipment could have just done them in. A line of speculation, but plausible at least.

Not so unusual

[sjbe]

I wonder exactly how terrible they are when they have a product with a solid demand, yet no one will invest in them. There has to be embezzlement.

There doesn't have to be embezzlement. Most common when a company runs into a situation like this is that they are short on cash. The cash cycle of a consumer products company is typically something like this. I've simplified the times to make the example easy to understand:

1) Place order for components with 30 day terms. Components received within a few days of placing order
2) Build product between days 5-30.
3) Pay for components on day 30.
4) Sell product into distribution channels with 30 day terms on day 30
5) Receive payment from customers on day 60

So they are paying for components about 30 days before they get paid by customers in this example . That means that if they run low on cash, they don't have enough money to buy new components to build next batch of new product. What usually happens next is a viscous cycle. They push out the length of time before they pay vendors. Eventually vendors get tired of this and put them on credit hold or demand cash on delivery. This means they don't have enough cash on hand to buy new components to build new product so their incoming cash flow declines which makes it even harder for them to pay vendors. Lather rinse repeat and the company prospects decline.

This happens all the time to companies. If there is strong demand for products and/or back orders the company might be able to get a bridge loan or investment. If product demand is weak the company is probably looking at bankruptcy.

Premise = Bullshit

[Anonymous Coward]

"If you click on any of the products for sale on their site, it will say that they're all sold out.."

Except, _all_ of the articles are (still) available to order, just, not in the initially selected color.
Now, none of this makes either the articles themselves, or indeed the websites coding (how about, default to in-stock color on page load, chaps?) any more (or less) worthwhile. But the article above sounds like entirely speculative bullshit to myself and indeed, the first (and only) thing I checked, took me literally ten seconds to disprove and find every article still in stock. IANAL either, but there is probably such a thing as being needlesly damaging to a firms reputation, this under false pretences - and if they are that desperate for new revenue sources? - hell, who'd blame them. Reaching for the lawyer's number would appear, n this case, somewhat justified, IMO. Its also why, you should probably have capable editors, but thats another story altogether.