N2 recall throws Neonode off balance

Neonode Inc. needs patience from investors, the company’s interim CEO wrote yesterday in an open letter.
The fledgling, Swedish public company, known to many for its small, touchscreen N2 device – which debuted long before Apple Inc.’s iPhone – will miss its guidance from the first quarter, largely due to a recall of its products for “reception problems,” interim CEO and Chairman Per Bystedt wrote.
The problem has been corrected, but the recall and repair of all shipped products cost time and money, according to Bystedt.
Neonode was notified by Nasdaq on July 1 that it faces delisting; a hearing is set for Aug. 28. Its most recent annual report is available here.
The other reason for missed guidance was the company’s attempt to enter too many new markets too quickly, the CEO added. The solution: focus on fewer but larger markets.
Analysts have said that scaling up may be among the challenges faced by a small market player such as Neonode.
“I fully understand that many of our investors and shareholders are disappointed by the …. lack of sales success and, consequently, the impact of our share price during the last two to three months,” Bystedt wrote.
Bystedt said he has invested nearly $3 million in the company. He pledged to improve shareholder communication and financial transparency. A shareholders meeting is set for Aug. 5.
The company garnered attention last year at the 3GSM World Congress and at the CTIA Wireless 2007 show later that spring with the N2, a quad-band, GSM/GPRS device running a version of Microsoft Corp.’s Windows Mobile operating system. The touchscreen device is designed to be held in one hand and navigated with a thumb swept over its optical touchscreen. At that time, Mikael Hagman joined the company as CEO and president after leading Sony Corp.’s efforts in Sweden and Finland.
Hagman resigned in May and Bystedt, board chairman, stepped in as interim CEO. The company has offices in Stockholm and in San Ramon, Calif.