Brillian Corp., a fledging Tempe-based developer of high definition televisions, suffered a second major setback in its quest to bring new HDTV technology to consumers when Sears Roebuck & Co. ended a $6 million agreement to purchase the company's rear-projection TVs.
Following the announcement Monday, Brillian shares plunged more than 37 percent to hit a 52-week low. Sears had committed to buy a minimum of 1,500 of the 65-inch HDTVs over one year, with each unit having a retail price of about $8,000.
Sears spokesman Bill Masterson confirmed the termination of the agreement, but he declined to comment on the reasons.
Brillian chief financial officer Wayne Pratt said Sears' decision was related to production problems with the HDTVs, which use a revolutionary technology called Liquid Crystal on Silicon to produce an ultra-sharp picture.
On Sept. 9, Brillian said it was experiencing difficulty obtaining light engines, a key component inside the TVs, from subcontractor JDS Uniphase. As a result, Brillian suspended production of the units until early October, when more light engines are expected to be available. Despite the loss of its largest retail partner, Pratt said Brillian is proceeding with plans to ramp up production in the fourth quarter because the company is confident other distributors will be found.
The situation will mean more units will be available to Jerry's Audio-Video stores and other electronics stores in the Valley that are interested in selling the product, he said. “We have a wholesaler in town who supplies Jerry's and other retail stores, and they had indicated they wanted more volume than we could have given them (because of the agreement to supply Sears). Now we are going back to them to determine just what volume they would like,” Pratt said.
President Vincent Sollitto Jr. said Brillian also is stepping up discussions with other national distribution channels.
The company's shares dropped $2.65, or 37.8 percent, to close at $4.35 Monday on the Nasdaq stock market.