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Pop-up ad pusher X10 files for bankruptcy

By Tricia Duryee
Seattle Times Eastside business reporter

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X10 Wireless Technology, which sells the cameras mainly through the Internet, filed for Chapter 11 bankruptcy Tuesday in U.S. District Court, seeking a voluntary reorganization.

The filing comes just two weeks after a Superior Court jury in Santa Ana, Calif., ordered X10 to pay $4.3 million in damages to three brothers who claimed the company stole their proprietary technology and failed to pay $564,000 in commissions.

The brothers, who had founded AdvertisementBanners.com in Yorba Linda, Calif., were listed as X10's largest unsecured creditor, at $3.9 million.

X10 attorney Ada Ko, of Lane Powell Spears Lubersky in Seattle, said the bankruptcy wasn't a result of the lawsuit but of overall business. "The lawsuit was just another creditor."

X10 may have been one of the first companies to take full advantage of pop-under and pop-up technology. It used splashy, colorful ads to draw attention to its Web site from such Web sites as The New York Times.

At its height two years ago, X10.com was the fourth-most visited Web site — ahead of well-known names like eBay and TerraLycos, according to research firm Jupiter in Darien, Conn.

The strategy may have backfired. Jupiter found that nearly two-thirds of the people who saw the ads closed the browser within 20 seconds.

Todd Hanson, an analyst with Gartner in San Jose, Calif., who used to follow X10, said he was disappointed.

"I know they've had sharkish marketing tactics, but the products are clever," said Hanson, who has a wireless camera on his porch and can turn on the TV to see who's there when his doorbell rings. "The user in me says bummer, but the analyst in me says maybe they had it coming."

The company, which lists its headquarters in Kent, did not return phone calls seeking comment.

It is claiming to have less than 200 unsecured creditors who are owed less than $50 million. It has up to $10 million in assets.

Other unsecured creditors listed in the filing include: America Online for $55,413; FedEx, $39,930; Foxnews.com, $40,866; and Google, $69,984.

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com

Copyright © 2003 The Seattle Times Company