Beleaguered Xerox will bid farewell to high-tech paper business

Troubled copy giant Xerox plans to spin off Gyricon Media, a division that has developed "electric paper" technology that displays text and graphics like a computer screen.

Gyricon chief executive Bob Sprague said Wednesday he intends to see Gyricon technology replace signs at some supermarkets and retail stores by next year.

"We have talked to many potential partners and customers, and they're extremely excited," Sprague said, declining to give any specific names until the contracts are signed.

Developed at the fabled Xerox Palo Alto Research Centre (PARC), Gyricon's "paper" is a rubbery, thin material that consists of billions of hair-width-sized plastic balls, each half black and half white. The sheet is soaked in oil to create a tiny air pocket around each ball, which can then rotate in response to an electric current.

A wireless radio frequency controlled by a computer is used to adjust the display on the signs by rotating the balls to a white or black side.

Sprague said Gyricon will sell the signs, along with the needed wireless service and software applications.

After the spinoff, Xerox will retain a majority stake in the company; private investors will hold a minority stake. Sprague said Gyricon is actively seeking additional investors and plans to sell shares in an initial public offering.

Some analysts view the spinoff as a positive sign that financially troubled Xerox still has some valuable assets.

Shares of the venerable copier company have fallen 79 percent this year, and the company has sold assets and laid off employees. Last quarter, the company reported its first quarterly loss in 16 years.

Shares of Xerox closed down 13 cents, or 2.63 percent, at $4.63 Wednesday. In the past year, the shares have traded as high as $29.31.

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